(The following statement was released by the rating agency)
Dec 11 - Fitch Ratings has affirmed the outstanding ratings for NiSource
Inc. (NI) and its subsidiaries as fully listed at the end of this
release. The affirmations include NiSource Finance Corp. (NiSource Finance) and
NiSource Capital Markets Inc., NI's two financing subsidiaries and Northern
Indiana Public Service Co. (NIPSCO), an electric and gas utility. The Rating
Outlooks are maintained at Stable. Approximately $7.2 billion of long-term debt
is affected by the rating actions.
KEY RATING DRIVERS: NI's rating and Stable Outlook reflect the low business risk
and consistent operating performance generated by its geographically diverse mix
of regulated operations. Other considerations include the long-term financial
impact of aggressive pipeline and gas utility system modernization programs and
electric environmental capital expenditures, with a substantial portion of
recoveries expected to be received through tracking mechanisms and relatively
weak credit metrics at NI.
FORWARD EXPECTATIONS: NI's financial profile is expected to remain consistent
with its current rating though its current multi-year infrastructure-build
cycle. Fitch projects NI's 2012 debt to EBITDA to be approximately 5.0x.
Typically NI's leverage peaks at the end of the year as a result of seasonal gas
storage purchases at its gas utilities and drops during the following months as
gas costs are recovered. Leverage ratios modestly strengthened during 2012
primarily benefiting from new electric rates effective Dec. 27, 2011, $339
million forward equity sale in September 2012, and the timely financial recovery
under tracking mechanisms of a significant portion of NI's capital expenditures.
LIQUIDITY: NI's liquidity is expected to be adequate. NiSource Finance has a
$1.5 billion revolving credit facility that matures in May 2017. The company
also issues 'F3' rated commercial paper under a $500 CP program that is
backstopped by the revolver. The revolver has one financial covenant which sets
a maximum consolidated debt-to-cap ratio of 70%. The revolver also includes
limitations on liens and restrictions on asset sales. At the end of the third
quarter of 2012 NI had approximately $1.439 billion in net available liquidity.
NI also has a total of $515 million of accounts receivable securitization
facilities as follows: $240 million at Columbia Gas of Ohio; $200 at NIPSCO; and
$75 million at Columbia Gas of Pennsylvania. Upcoming debt maturities at
NiSource Finance include $420 million of notes due 2013 and at NIPSCO $68
million due 2013.
Positive: Future developments that may, individually or collectively, lead to a
positive rating action include: reduced regulatory risk with expanded revenue
tracking mechanisms and improving credit metrics through some combination of
earnings growth and/or debt reduction.
Negative: Future developments that may, individually or collectively, lead to a
negative rating action include: unfavorable regulatory decisions and higher than
anticipated leverage which could result should NI not issue adequate equity to
help fund its significant capital program. Debt to EBITDA above 5.5x on a
sustained basis would be a catalyst for a negative rating action.
The following ratings have been affirmed with a Stable Outlook:
--Issuer Default Rating (IDR) at 'BBB-'.
NiSource Finance Corp.
--IDR at 'BBB-';
--Senior unsecured 'BBB-'
--Short term IDR 'F3';
--Commercial paper 'F3.
NiSource Capital Markets
--Senior unsecured 'BBB-'.
Northern Indiana Public Service Co.
--Senior unsecured and revenue bonds 'BBB'.
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);
--'2013 Outlook: Natural Gas Pipelines and MLPs' (Nov. 30, 2012);
--'Pipelines, Midstream, and MLP Stats Quarterly - Second Quarter 2012' (Sept.
--'Marcellus Shale Report: Midstream and Pipeline Sector Challenges and
Opportunities' (June 10, 2012);
--'Top Ten Questions Asked by Pipeline, Midstream, and MLP Investors' (May 1,
--'Natural Gas Pipelines: Hot Topics' (Oct. 13, 2011).
Applicable Criteria and Related Research:
Corporate Rating Methodology
2013 Outlook: Natural Gas Pipelines & MLPs
Pipelines, Midstream, and MLP Stats Quarterly -- Second-Quarter 2012
Marcellus Shale Report: Midstream and Pipeline Sector --
Top Ten Questions Asked by Pipeline, Midstream and MLP Investors
Natural Gas Pipelines: Hot Topics -- Long-Term Trends Affecting Pipeline Risk
(New York Ratings Team)
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