U.S. Utilities Cut to Negative in First as Moody's Warns of Debt
- Credit rating firm sees lower cash flow due to tax reform
- Higher financial risk forecast for next 12 to 18 months
Photographer: Steve Hockstein/Bloomberg
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For the first time ever, Moody’s Investors Service cut its outlook for U.S. utilities to negative, warning that the sector’s debt levels have reached their highest since the financial crisis and may remain there for months.
The sector’s consolidated debt-to-equity ratio has hit the highest level since 2008 as companies finance mergers, acquisitions and other investments in renewable energy and pipelines, Moody’s analysts led by Ryan Wobbrock said in a note Monday. The federal tax overhaul signed by President Donald Trump stands to make matters worse, since utilities that depend on regulated returns are collecting less cash from customers to cover their tax expenses, the ratings firm said.