Text-Fitch rates Xcel Energy's $250m sr unsec notes

Thu Sep 8, 2011 1:00pm EDT

(The following statement was released by the rating agency.)
NEW YORK, September 08 (Fitch) Fitch Ratings has assigned a 'BBB+' rating to
Xcel Energy (XEL.N) Inc.'s (Xcel) $250 million issuance of 4.80% senior
unsecured notes,
due Sept. 15, 2041. Proceeds from the sale will be used to repay short-term
borrowings and for general corporate purposes. The notes will rank on parity in
right of payment with all existing and future unsecured debt. The Rating
for Xcel is Stable.
Key drivers of Xcel's rating include: strong underlying cash flows from four
regulated subsidiaries with solid credit profiles, generally constructive
regulatory environments, a conservative capital structure and financing plans;
and, rate case activity in multiple state jurisdictions. Fitch's rating assumes
reasonable outcomes in the pending rate cases in Minnesota, Wisconsin and
Colorado in second-half 2011; and, North Dakota and South Dakota in first
quarter 2012.
Xcel's cash flow based metrics are consistent with Fitch's guidelines for the
rating category and business risk. The June 30, 2011 (LTM) ratio of
EBITDA-to-interest was 4.5 times (x); debt-to-EBITDA was 3.8x; funds from
operation (FFO) interest coverage was 4.6x; and, FFO-to-debt was 21.3%. Fitch
projects both EBITDA-to-interest and FFO interest coverage to remain greater
than 4.0x and leverage to be consistently less than 4.0x over the next several
A primary rating concern is the pending rate case in New Mexico for
Public Service Co. (SPS, IDR 'BBB'; Negative Outlook by Fitch), where allowed
returns have historically been below industry averages. Another rating concern
is the significant capital expenditure program of approximately $2.6 billion
year through 2015. Major components of capital expenditures include Xcel's
investments in its generation fleet to meet mandated state standards, as well
wind farms and related transmission lines.
Fitch's concern related to capital spending is partially offset by liquidity
which Fitch considers sufficient to meet short-term funding requirements. Xcel
has $2.45 billion in consolidated borrowing capacity, which is primarily used
support the Company's commercial paper program. Xcel and subsidiaries
collectively had $656 million in commercial paper outstanding as of June 30,
2011, which included $336 million of borrowings under an $800 million revolving
credit facility which Xcel is the sole borrower and that expires in March 2015.
Consolidated long-term debt maturities are considered manageable and are as
follows:  $45 million in 2011; $1,050 million in 2012; $250 million in 2013;
$275 million in 2014; and, $250 million in 2015. Maturing debt is expected to
met through a combination of internally generated cash flows and external debt
Xcel is a holding company headquartered in Minneapolis, Minnesota with
subsidiary companies engaged primarily in the utility business. Xcel's four
wholly-owned utilities serve electric and natural gas customers in portions of
Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas
Primary Analyst:
Sharon Bonelli
Managing Director
Fitch Inc.
33 Whitehall St.
New York, NY 10004
Secondary Analyst:
Lindsay Minneman
Associate Director
Committee Chairperson:
Donna McMonagle
(New York Ratings team)
(email: Harold.Barnett@thomsonreuters.com;
Reuters messaging: harold.barnett.thomsonreuters.net; Tel: +1-646-223-4186))
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