The A Rating

摘要

When I came to the Michigan Public Service Commission in 1987, the average regulated electric utility had a relatively solid credit rating-in the A- to BBB+ range, comfortably investment-grade-and utilities borrowed money for capital improvements rather easily. In 1992, close to 65 percent were A- or higher, and around 25 percent were in the BBB rating category. By 1998, 61 percent were A- or higher, with 31 percent in the BBB category.rnToday the average rating for the sector is slightly above a BBB rating-still investment-grade, but now just 18 percent of electric companies are a- or higher, and more than 62 percent are in the bbb range.rnThe downward trend in utility ratings toward bbb seemed acceptable during the past decade-utilities could still borrow, relying on their regulated positions and growing demand; and dividend-paying stocks became more attractive to equity investors. It seemed that cashflow and liquidity requirements no longer needed to be as high as for A-rated companies.