Oncor Electric Delivery Co. LLC Ratings Affirmed On Closing Of InfraREIT Acquisition; Outlook Stable


  • Oncor Electric Delivery Co. LLC (Oncor) completed its acquisition of 100% of InfraREIT Inc. after receiving regulatory approvals by the Public Utility Commission of Texas and Federal Energy Regulatory Commission. The terms of the acquisition are consistent with our expectations when it was announced in October 2018.
  • S&P Global Ratings affirmed its 'A' issuer credit rating on Oncor.
  • The stable outlook on Oncor reflects our expectation of stable financial measures for the consolidated company, continued operational integration of InfraREIT assets, and that its financial measures will consistently reflect the lower end of the range for its financial risk profile category.
NEW YORK (S&P Global Ratings) May 17, 2019-- S&P Global Ratings today took the rating actions listed above. Our rating affirmation and stable outlook reflect Oncor Electric Delivery Co. LLC's (Oncor's) acquisition of InfraREIT Inc., the terms of which are consistent with our expectations when it was announced in October 2018. Oncor acquired 100% of InfraREIT for about $1.275 billion purchase price plus certain fees and expenses relating to the acquisition. The company also assumed about $950 million of outstanding debt at InfraREIT at closing. Consistent with our expectations, the acquisition is funded primarily with capital contribution from Oncor's owners. The acquisition is consistent with the company's long-term strategy to expand its low-risk electric transmission and distribution (T&D) business and incrementally enhances Oncor's business risk profile because the vast majority of assets are lower-risk transmission and provide a steady cash flow. This offsets modestly weaker financial measures driven largely by the assumption of incremental debt associated with the transaction. We expect the company's financial measures to remain at the lower end of the range for its financial risk profile category. We assess Oncor's business risk profile as excellent and its financial risk profile as intermediate.
The stable outlook on Oncor reflects our expectation of stable financial measures for the consolidated company, continued operational integration of InfraREIT assets, and that its financial measures will consistently reflect the lower end of the range for its financial risk profile category.
We could lower the rating on Oncor over the next 24 months if its ability to effectively and consistently manage regulatory risk weakens or its financial measures significantly deteriorate, reflecting FFO to debt consistently below 12%. This could occur because of material adverse regulatory decisions or operational difficulties leading to unexpected cost increases.
We could raise the rating on Oncor over the next 12-24 months if the company's financial measures improve, reflecting FFO to debt consistently greater than 16%, without any adverse impact on the company's above-average regulatory risk management or business risk profile.
We work across the world

From London to San Francisco, to our home base in (Saint Helier) Jersey, we’re looking for extraordinary and creative scientists to help us drive the field forward.

AC Investment Inc. currently does not act as an equities executing broker or route orders containing equities securities. If AC Invest’s business model were to change and it begins routing non-directed orders in NMS securities, it will comply with the disclosure requirement of Rule 606.

77 Massachusetts Avenue Cambridge, MA 02139 617-253-1000 pr@ademcetinkaya.com