Oil and Nuclear Energy Investments Take a Hit :)

Posted by Trish Riley, June 6, 2010

Happy Monday, Folks
For those who are interested, Moody’s, the rating service,  downgraded BP Friday and warns that the  corporation’s fiscal status may decline further as the oil continues gushing,  expenses and claims mount, and stock holders continue fleeing the stock.
The start of the Moody’s release, and contact info, below.
Have a great week.
Roger w

Moody’s downgrades BP to Aa2; on review for further possible downgrade

Short-term debt rating affirmed; approximately USD25.1 billion of rated
debt securities affected

London, 03 June 2010 — Moody’s Investors Service has today downgraded the
senior unsecured ratings of BP plc (BP) and its guaranteed subsidiaries
by one notch to Aa2 from Aa1, and the long-term issuer ratings of BP
Corporation North America Inc. and BP Finance plc to Aa3 from Aa2. At the
same time, Moody’s has also placed the above-mentioned long-term debt
ratings on review for further possible downgrade. Concurrently, Moody’s
has affirmed the P-1 short-term debt ratings of BP’s subsidiaries, which
are solely based on the irrevocable and unconditional guarantee of BP.

Today’s downgrade of BP’s long-term debt ratings reflects Moody’s
expectation that the protracted oil spill in the Gulf of Mexico, caused
by the explosion on the Transocean Deepwater Horizon drilling rig, will
result in significant containment and clean-up costs as well as
litigation costs. Moody’s expects these costs to weigh significantly on
BP’s free cash flow generating capacity and to constrain its ability to
focus on other key areas of the company’s business in the near to
intermediate term.

London
David G. Staples
Managing Director
Corporate Finance Group
Moody’s Investors Service Ltd.

And if you’re interested in more Florida energy news –

Progress Energy

Moody’s Downgrades Progress Florida to Baa1; Confirms Progress Energy at
Baa2

Approximately $4.5 Billion of Debt Securities Downgraded

New York, April 09, 2010 — Moody’s Investors Service downgraded the
ratings of Progress Energy Florida, Inc. (senior secured to A2 from A1;
senior unsecured to Baa1 from A3) and confirmed the ratings of its parent
company, Progress Energy, Inc (Baa2 senior unsecured, Prime-2 short-term
rating for commercial paper). The rating outlooks of Progress Energy and
Progress Energy Florida are stable. Moody’s affirmed Progress Energy
Florida’s Prime-2 short-term rating for commercial paper and the ratings
and stable outlook of Progress Energy Carolinas, Inc. (A3 senior
unsecured). This rating action concludes the review for downgrade of the
ratings of Progress Energy and Progress Energy Florida initiated on
January 19, 2010.

“The downgrade of the ratings of Progress Energy Florida reflects the
recent decline in the political and regulatory environment for investor
owned utilities in Florida and continued challenging economic conditions
in its service territory, especially related to the Florida housing
market,” said Michael G. Haggarty, Vice President and Senior Credit
Officer.

Progress Energy Florida’s most recent rate case was negatively affected
by delays, controversy, and political interference in the regulatory
process. After requesting a $499 million base rate increase and a 12.5%
return on equity, the company received a $132 million increase that had
been granted earlier to recover costs related to a Florida Public Service
Commission approved plant repowering, and a 10.5% return on equity.
Because of these developments, Moody’s now views the company’s
regulatory environment as less supportive and predictable than it has
been historically, increasing the company’s regulatory risk profile.
Mitigating this higher risk are declining capital expenditures at the
Florida utility, including at least a 20 month delay in plans to pursue
new nuclear construction at its Levy County plant site.

The downgrade also reflects the severe economic slowdown that has been
experienced in the company’s service territory since 2007, resulting in
lower growth rates and lower customer usage than historically. The
difficult economy was a contributing factor in the company’s rate case
decision in January, with the FPSC exhibiting sensitivity to economic
conditions in the state throughout the rate proceedings. Until the
Florida economy improves, Moody’s believes it will likely continue to
remain an issue in the company’s future regulatory rate proceedings.

The confirmation of the ratings of parent company Progress Energy
considers the consolidated organization’s completely regulated
businesses, its low risk profile, and the diversity provided by its two
regulated utility subsidiaries. The company’s other utility subsidiary,
Progress Energy Carolinas, is strongly positioned at its A3 rating, with
strong cash flow coverage metrics and constructive regulatory environments
of North and South Carolina. The strength and stability of PEC has to
some extent mitigated the increased regulatory risk for Progress Energy
at PEF.

Progress Energy’s consolidated financial metrics have been adequate
though slightly weak for its Baa2 rating, including CFO pre-working
capital plus interest to interest in the 3.5x range and CFO pre-working
capital to debt in the 15% range. However, Moody’s believes Progress
Energy’s credit profile is materially stronger than most utility holding
companies at the Baa3 rating level, where business mix profiles are
typically higher risk due to a high proportion of unregulated businesses.
Progress Energy does maintain a high level of the debt at the parent
company level and a high dividend payout, however, constraining both
ratings and credit quality.

The stable outlook on the ratings of Progress Energy reflects the low
business risk profile of its two regulated utility businesses, a
manageable capital expenditure program, constructive regulation in North
and South Carolina, and Moody’s expectation the company will not add any
additional leverage at the parent company level and will gradually
moderate its high dividend payout. The stable outlook on the ratings of
Progress Energy Florida reflects Moody’s view that the utility’s
financial performance and cash flow coverage metrics will remain adequate
for its rating despite the unexpected rate case decision in January, that
strong cost recovery provisions in Florida will continue to be supportive
of credit quality, that capital expenditures will decline over the next
few years, and that new nuclear plant construction plans will not be
accelerated.

The last rating actions on Progress Energy and Progress Energy Florida
were on January 19, 2010, when their ratings were placed under review
for possible downgrade. The last rating action on Progress Energy
Carolinas was on August 3, 2009, when its senior secured rating was
raised to A1 from A2.

The principal methodology used in rating these issuers was Regulated
Electric and Gas Utilities, which can be found at www.moodys.com in the
Rating Methodologies sub-directory under the Research & Ratings tab.
Other methodologies and factors that may have been considered in the
process of rating these issuers can also be found in the Rating
Methodologies sub-directory on Moody’s website.

Ratings downgraded include:

Progress Energy Florida’s senior secured to A2 from A1; senior unsecured
and Issuer Rating, to Baa1 from A3; and preferred stock rating, to Baa3
from Baa2.

Ratings confirmed include:

Progress Energy’s Baa2 senior unsecured and Prime-2 short-term rating for
commercial paper.

Florida Progress Funding Corporation’s Baa2 junior subordinated and the
Baa2 preferred stock rating of FPC Capital 1.

Ratings affirmed include:

Progress Energy Florida’s Prime-2 short-term rating for commercial paper;

Progress Energy Carolina’s A1 senior secured; A3 senior unsecured and
Issuer Rating; Baa2 preferred stock; and Prime-2 short-term rating for
commercial paper.

Progress Energy, Inc. is a holding company for regulated utilities
Progress Energy Carolinas, Inc. and Progress Energy Florida, Inc. and is
headquartered in Raleigh, North Carolina.

New York
Michael G. Haggarty
VP – Senior Credit Officer
Infrastructure Finance Group
Moody’s Investors Service