CHICAGO - (Business Wire) Fitch Ratings has downgraded the rating of Utility Contract Funding LLC's (UCF) senior secured bonds due 2016 to 'BBB+' from 'A-'. The downgrade is consistent with the current credit quality of Public Service Electric & Gas Co. (PSE&G IDR of 'BBB+' with a Stable Outlook by Fitch). The Rating Outlook of UCF is Stable.
Due to the structural balance of the power purchase agreements (PPAs), UCF's risk exposure is limited to PSE&G's ability to make payments under the amended and restated PPAs, and Morgan Stanley's guarantee of Morgan Stanley Capital Group's (MSCG) performance under the mirror PPAs. Accordingly, the rating of the bonds is constrained by the lower counterparty credit rating of PSE&G or Morgan Stanley (IDR of 'A' with a Negative Outlook).
UCF purchases energy from MSCG, an indirect wholly owned subsidiary of Morgan Stanley, and resells the energy to PSE&G under long-term contracts. UCF is a bankruptcy-remote, indirectly owned subsidiary of JPMorgan Chase & Co. (IDR of 'AA-' with a Stable Outlook). Fitch views the credit quality of UCF as independent from the credit quality of its owner.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings
Chris Joassin, +1-312-368-3166 (Chicago)
Doug Harvin, +1-312-368-3166 (Chicago)
Media Relations
Cindy Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com
