Fitch Rates Public Service Company of Colorado's First Mortgage Notes 'A'

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned an 'A' rating to Public Service Company of Colorado's (PSCo) proposed $600 million new issue of first mortgage bonds. The bonds are expected to be issued in two tranches with 10 and 30 year maturities. The proceeds will be used to fund the payment at maturity of $300 million of 4.375% first mortgage bonds due Oct. 1, 2008 with the balance of proceeds applied to the repayment of short-term debt and general working capital. PSCo's Issuer Default Rating (IDR) is 'BBB+'. The Outlook is Stable.

The current ratings of PSCo, a subsidiary of Xcel Energy Inc. (IDR 'BBB+', Stable), reflect the company's strong credit metrics, the growth of its electric operations business and a generally constructive regulatory environment. Fitch expects credit metrics to remain at or better than the targets for PSCo's ratings category. Fitch projects that 2008 and 2009 FFO interest coverage will be approximately 5 times (x), while debt to FFO will be in the range of 4.1x to 4.5x. These projections consider approximately $1.4 billion of capital spending over the next two years, as well as a modest increase in debt to fund such capital investments.

The Stable Outlook reflects the fact that while credit ratios are expected to improve over the next several years due to enhanced recovery of capital spending, it is unlikely that PSCo's credit profile will materially improve until the end of its current capital spending program.

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