Moody's Investors Service said it downgraded the rating of South Carolina Public Service Authority's (Santee Cooper) revenue bonds to A1 from Aa3.
Concurrent with this rating action, Moody's has assigned an A1 rating to the planned sale of $1,700,560,000 of Santee Cooper revenue bonds consisting of $788,365,000 2013 tax-exempt Series A; $369,500,000 2013 tax-exempt refunding Series B; $212,940,000 taxable Series C; and $329,755,000 2013 taxable Series D (Libor Index Bonds), expected to be sold in late July 2013. The rating outlook for Santee Cooper is stable.
The downgrade and A1 rating assignment reflect the expected sale of a part of Santee Cooper's ownership interest in Summer Nuclear Units 2 and 3 (Summer 2 & 3) will take longer than initially expected resulting in further tightening of the utility's financial and competitive position.
Santee Cooper's debt service coverage ratio (DSCR) in 2012 was 1.30x which is below the median for A rated utilities. While Santee Cooper's planning target for DSCR is 1.50x, forecasted adjusted debt service coverage (including the payment of commercial paper interest) in several of the next few years could potentially fall below that level.