Moody's Investors Service upgraded Philadelphia Gas Works to Baa1 from Baa2, citing a stabilized financial position. The outlook is stable.
The upgrade, announced late on July 22, applies to PGW's outstanding pre-sale 1975 and 1998 ordinance bonds of which $993 million are outstanding. The rating action comes ahead of a $275 million revenue refunding bond deal to refinance all of the $134 million in outstanding 1975 ordinance bonds as well as certain maturities from 1998 ordinance bonds.
"The upgrade to Baa1 from Baa2 reflects the supportive rate regulation PGW has received over the last several years that has strengthened the utility's rate base, resulting in an improved and stabilized financial position that is expected to continue," said Moody's analysts John Medina and Chee Mee Hu in their July 22 report. "The utility's management has simultaneously enhanced PGW's operating efficiency through favorable labor negotiations, operating cost savings, and other improvements regarding vehicle tracking and the cast iron main replacement program."
Standard & Poor's also weighed in on PGW Wednesday and revised its outlook for its A-minus rating on the utility to positive from stable citing improved debt service coverage levels.
PGW supplies and transports natural gas to 500,000 primarily residential customers within the City of Philadelphia. A 2014 proposal to privatize PGW through a sale to UIL Holdings Corp. for $1.86 billion was rejected by the Philadelphia City Council.
