Standard & Poor’s has upgraded its underlying rating on two series of outstanding bonds carried by Citizens Gas and Coke Utility as it prepares to enter the market with a $170.9 million of gas utility distribution system second-lien revenue refunding bonds.

Indianapolis is acting as the conduit issuer for the utility.

Standard & Poor’s assigned an A-plus to the upcoming issue. It also upgraded to AA-minus from A the utility’s senior-lien gas utility system revenue bonds, and upgraded first- and second-lien gas utility system distribution system revenue bonds to A-plus from A. Standard & Poor’s also affirmed its A-1 rating on the utility’s $50 million of outstanding commercial paper. As of September 2007, Citizens had $387.6 million of total gas-system-supported debt.

The utility also plans to terminate an existing swap it has with JPMorgan Chase & Co. for bonds issued in 1998 — the termination fee is expected to be around $8 million, which will be paid with cash.

Citizens Gas and Coke Utility is operated by Indianapolis and serves Marion County. It provides retail gas service to roughly 266,000 customers in the area, including residential, commercial, and industrial customers.

Analysts praised the utility’s improved cash flows and a regulatory environment that is “more supportive of credit quality,” wrote analyst Peter Block in a release accompanying the upgrade.

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