Buckeye Powers Down

Fitch Ratings downgraded to A from A-plus $29 million of air quality revenue bonds issued on behalf of Buckeye Power Inc. and assigned an A rating to $75 million of environmental improvement revenue bonds that were issued in December.

Proceeds from the recent bond issue will be used to finance air quality facilities, Fitch said. The debt matures in 2025.

The Ohio Air Quality Development Authority issued the bonds.

Buckeye Power is a nonprofit generation and transmission cooperative that supplies wholesale electricity to 39,000 customers across Ohio.

It is in the midst of a long-term $2.2 billion capital plan that is expected to be complete by 2015. The projects include ­upgrades, improvements, and the ­acquisition of new generation, according to Fitch.

 The downgrade is due to Buckeye Power’s weakening financial position, analysts said.

“Buckeye’s financial position and performance metrics, while respectable, have experienced a steady decline in recent years reflecting, in part, the cooperative’s capital spending program and the impact of related borrowings,” Fitch analyst Dennis ­Pidherny wrote in a report on the ­downgrade.

Debt-service coverage for fiscal 2010 totaled 0.98 times, excluding the use of deferred revenue, according to Fitch. The coverage decline, coupled with drops in other key measures, is more commensurate with Fitch’s A rating than an A-plus rating. 

On the positive side, the cooperative has strong contracts with its 25 member distribution systems that go through 2057.

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