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Text-Fitch rates Xcel Energy's $250m sr unsec notes
September 8, 2011 / 5:01 PM / in 6 years

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

(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 Outlook 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 years. A primary rating concern is the pending rate case in New Mexico for Southwestern 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 per year through 2015. Major components of capital expenditures include Xcel’s investments in its generation fleet to meet mandated state standards, as well as 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 to 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 be met through a combination of internally generated cash flows and external debt refinancings. 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 and Wisconsin. Contact: Primary Analyst: Sharon Bonelli Managing Director +1-212-908-0581 Fitch Inc. 33 Whitehall St. New York, NY 10004 Secondary Analyst: Lindsay Minneman Associate Director +1-212-908-0592 Committee Chairperson: Donna McMonagle +1-212-908-0258 (New York Ratings team) (email: Harold.Barnett@thomsonreuters.com; Reuters messaging: harold.barnett.thomsonreuters.net; Tel: +1-646-223-4186)) 

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