The new notes will rank pari passu with SPS' existing senior secured obligations. Net proceeds will be used to repay short-term debt borrowings and for general corporate purposes, including the funding of SPS' capital expenditure program.
KEY RATING DRIVERS
Low Risk Business Model: SPS' ratings are supported by its low-risk regulated utility businesses that operate in the regulatory jurisdictions of
Pending Texas Rate Proceeding: SPS is requesting a
Balanced New Mexico Rate Order: On
Adequate Credit Metrics: Fitch expects SPS' credit metrics to remain in line with the 'BBB' rating category over the forecast period. For the LTM ending
Elevated Capex: SPS plans on spending a sizeable
Sufficient Liquidity: SPS has access to
Positive Rating Actions: No positive rating actions are anticipated in the near term.
Negative Rating Actions: Unfavorable regulatory developments including the inability to timely recover costs associated with SPS' large capex program would likely lead to a negative rating action.
FFO adjusted leverage greater than 4.6x on a sustained basis could lead to negative rating actions.
A shift in management strategy that results in weaker financial support from XEL would pressure the ratings.
Additional information is available at 'www.fitchratings.com'.
--'Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage' (
--'Rating U.S. Utilities, Power and Gas Companies' (
Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage
Rating U.S. Utilities, Power and Gas Companies (Sector Credit Factors)
Source: Fitch Ratings
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