Fitch Rates Tampa Electric's $250MM Senior Unsecured Notes 'A-'
NEW YORK -- September 20, 2012
Fitch Ratings has assigned an 'A-' rating to Tampa Electric Company, Inc.'s
(Tampa Electric) new $250 million issue of 2.6% senior unsecured notes due
Sept. 15, 2022. The Rating Outlook is Stable. The new senior unsecured notes
will rank equally with Tampa Electric's existing senior unsecured obligations.
Net proceeds will be used to repay short- and long-term debt and for general
Solid Financial Performance:
The ratings recognize Tampa Electric's consistently strong financial results
driven by effective cost management and base rate increases in 2009 and 2010.
For the latest 12 months (LTM) ended June 30, 2012, EBITDA/interest stood at
5.6 times (x) and debt/EBITDA at 2.7x, while funds from operations
(FFO)/interest was 5.9x and FFO/debt was 32.5%. Credit protection measures are
strong relative to utility peers with similar risk profile. Fitch projects
interest coverage and leverage measures to remain at or near current levels
Supportive Regulatory Compact:
Fitch considers the Florida regulatory environment to be supportive of credit
quality with annual rate adjustments for fuel and environmental compliance
costs. Tampa Electric is expected to earn within its authorized return on
equity range for the next several years and no new base rate case is
Fitch considers liquidity to be adequate to meet Tampa Electric's working
capital needs. Credit facilities include a $325 million five-year bank credit
facility that expires in 2016 and a $150 million one-year accounts receivable
facility that expires in 2013 and can be renewed annually. As of June 30,
2012, there was a total of $0.7 million of combined borrowings outstanding.
Cash on hand was $84.4 million. Near-term debt maturities are manageable with
$83 million due in 2014 and $83 million in 2015.
Fitch's primary concerns remain related to the slow pace of economic recovery
in Tampa Electrics' service territory and its effect on load trends. While
there are signs of moderate improvement, a rebound in load growth remains
uncertain as is the timing of future capex for incremental generating
Parent Ratings Linkage:
Tampa Electric's ratings are linked to that of its parent, TECO Energy, Inc.,
whose credit profile includes greater leverage and higher business risk. While
Tampa Electric relies on its parent for equity funding, Fitch recognizes that
the utility has strong stand-alone access to long- and short-term debt
Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.
Applicable Criteria and Related Research
--'Corporate Rating Methodology' (Aug. 8, 2012);
--'Rating North American Utilities, Power, Gas, and Water Companies' (May 16,
--'Parent and Subsidiary Rating Linkage' (Aug. 12, 2011).
Applicable Criteria and Related Research:
Corporate Rating Methodology
Rating North American Utilities, Power, Gas, and Water Companies
Parent and Subsidiary Rating Linkage
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Brian Bertsch, +1-212-908-0549
Media Relations, New York
Philippe Beard, +1-212-908-0242
One State Street Plaza
New York, NY 10004
Robert Hornick, +1-212-908-0523
Glen Grabelsky, +1-212-908-0577
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