Fitch Affirms CenterPoint's Long-Term Ratings Following JV Announcement

  Fitch Affirms CenterPoint's Long-Term Ratings Following JV Announcement

Business Wire

NEW YORK -- March 18, 2013

Fitch Ratings has affirmed the long-term Issuer Default Ratings (IDR) and
instrument ratings of CenterPoint Energy Inc. (CNP) and its subsidiaries
following the announcement of a midstream joint venture (JV) agreement. The
Rating Outlook for all entities is Stable. Simultaneously, Fitch has upgraded
the short-term IDR for CNP and its subsidiary CenterPoint Energy Resources
(CERC) to 'F2' from 'F3'. CNP will combine 100% of its Field Services and
Interstate Pipelines businesses in an existing CNP subsidiary that will become
the Midstream JV. OGE Energy (OGE) along with Enogex JV partner ArcLight, will
contribute 100% of their interests in Enogex to the Midstream JV. A full list
of rating actions is provided at the end of this release.

KEY RATING DRIVERS

CNP's existing ratings and outlook have taken into consideration the expected
expansion in the midstream business segment including a private or public
partnership. Fitch believes that the overall business strategy and operating
risk at CNP and CERC will not meaningfully change as a result of the formation
of the JV in the foreseeable future.

Fitch consolidates the JV proportionately when calculating the credit metrics
for CNP and CERC. Fitch believes that CNP will likely support the JV under
times of the stress, due to its strategic importance. Fitch estimates that
this business segment will represent approximately 30% of CNP's total EBITDA
by 2016, rising from 25% in 2011. For analytical purposes, Fitch would
consider deconsolidation once a sizeable amount of the economic interest is
held by the public shareholders and an independent board is established.

CNP and CERC are expected to reduce debt with the proceeds from the JV term
loan. Fitch understands that CERC will provide a limited guarantee over the
life of JV's three-year $1.05 billion bank term loan and that such guarantee
will be subordinated to CERC's existing debt and will be of collection not
payment.

CNP and CERC's leverage metrics are expected to weaken in the next two to
three years, as their midstream earnings currently represent approximately 66%
of the total earnings at the JV while they receive 59% of the economic
interest. Additionally, the expected debt reduction at CERC will be taken
gradually resulting in deterioration of the leverage ratio in the near term.
Nevertheless, the credit profile remains supportive of current ratings due to
the headroom from its relatively low leverage and strong interest coverage
ratios. Fitch expects the metrics to improve in 2015 when synergy savings and
benefits of the growth projects materialize.

Fitch calculates that over the next three years CNP and CERC will produce
consolidated FFO to debt, on average, of 20.6% and 20.7% respectively and FFO
interest coverage of 4.6x and 5.4x. These metrics remain in line with Fitch's
guideline ratios for a 'BBB' rated issuer.

Following the formation of the JV, CNP and OGE may take various actions to
facilitate an initial public offering of the joint venture as a Master Limited
Partnership (MLP). An MLP would enhance capital access and efficiency in
managing planned growth capex over the next few years.

The upgrade of the short-term IDR reflects CNP and CERC's improved liquidity
as a result of the transaction. The JV is expected to obtain its own credit
facility and CNP is expected to maintain the size of its credit facilities in
the foreseeable future. CNP and CERC's credit facilities mature in September
2016. Additionally, CERC is expected to reduce intercompany borrowings and
public debt maturities using proceeds from the three-year $1.05 billion bank
term loan of the JV.

The ratings and outlook of CNP's regulated subsidiary CenterPoint Energy
Houston Electric (CEHE) are not affected by the proposed JV.

RATING SENSITIVITIES

Positive
--Upgrade at CNP and CERC is unlikely in the foreseeable future due to the JV
formation.

Negative
--If CNP and CERC incur substantial leverage to meet the capital calls at JV
or the JV is downgraded;
--If CEHE is downgraded;
--CNP and CERC's ratings will be negatively impacted if the regulatory
construct governing the gas distribution subsidiaries becomes unfavorable.

Fitch affirms the following ratings with a Stable Outlook:

CenterPoint Energy, Inc.
--Long-term IDR at 'BBB';
--Senior unsecured notes and pollution control revenue bonds at 'BBB';
--Secured pollution control revenue bonds at 'A';
--Junior Subordinated Debenture (ZENS) at 'BB+'.

CenterPoint Energy Houston Electric LLC.
--Long-term IDR at 'BBB+';
--First mortgage bonds at 'A';
--Secured pollution control revenue bonds at 'A';
--General mortgage bonds at 'A';
--Unsecured Credit Facility at 'A-';
--Short-term IDR at 'F2'.

CenterPoint Energy Resources Corp.
--Long-term IDR at 'BBB';
--Long-term senior unsecured notes at 'BBB';

Fitch upgrades the following ratings:
CenterPoint Energy, Inc.
-- Short-term IDR/commercial paper to 'F2' from 'F3'.

CenterPoint Energy Resources Corp.
--Short-term IDR/commercial paper to 'F2' from 'F3'.

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);
--'Parent and Subsidiary Rating Linkage' (Aug. 8, 2012);
--'Recovery Ratings and Notching Criteria for Utilities' (May 3, 2012);
--'Rating North American Utilities, Power, Gas and Water Companies' (May 16,
2011).

Applicable Criteria and Related Research
Corporate Rating Methodology
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460
Parent and Subsidiary Rating Linkage
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552
Recovery Ratings and Notching Criteria for Utilities
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=693750
Rating North American Utilities, Power, Gas, and Water Companies
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=625129

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ON THE FITCH WEBSITE.

Contact:

Fitch Ratings
Primary Analyst:
Julie Jiang, +1-212-908-0708
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Shalini Mahajan, +1-212-908-0581
Senior Director
or
Committee Chairperson:
Ralph Pelleccia, +1-212-908-0586
Senior Director
or
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brian.bertsch@fitchratings.com