CHICAGO--(BUSINESS WIRE)--The recently announced agreement to sell the Philadelphia Gas Works (PGW) to UIL Holdings Corporation does not heighten the risk to the utility's existing bondholders, Fitch Ratings says. According to the publicly disclosed terms outlined by the city of Philadelphia, the sale cannot be completed without the payment or legal defeasance of all outstanding revenue bonds pursuant to the terms of the bond resolution.
The proposed sale of PGW still requires regulatory approval from both the state's public utilities commission and the city council. The expected timeline for the potential approval from both regulatory bodies is not yet known. Until the approval process occurs and the asset sale is complete, Fitch expects no meaningful change in the utility's operating performance and will continue to monitor PGW's creditworthiness.
PGW currently has outstanding about $189 million of gas works revenue bonds, 1975 general ordinance, and $907.5 million gas works revenue bonds, 1998 general ordinance. Fitch rates the 1975 and 1998 bonds 'BBB+' and 'BBB', respectively, both with a Stable Rating Outlook.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.