Economic problems in Spain could have an impact on the credit rating of Central Maine Power, whose parent company, Iberdrola, is based there.
Standard & Poor’s Ratings Services reported in a release Monday that the credit rating for CMP is capped at the level of its parent company, which will be under review after a downgrade on the Kingdom of Spain’s credit rating to a “BBB-/A-3” level from a “BBB+/A-2” level, with a negative outlook.
If Iberdrola, which derived approximately 47% of its revenue from Spain in 2011, sees a drop as a result, it could impact CMP and the company’s other U.S. utilities, including Rochester Gas & Electric Corp. and New York State Electric & Gas, according to the Standard & Poor report.
The S&P announcement says such a downgrade might be avoided if the companies can enact “ring-fencing measures” to insulate the companies from Iberdrola. If they did so, S&P said the ratings could not be impacted by a downgrade of the parent company — although those measures are not currently in place.
The individual outlook for CMP was more positive, with the report stating that its current “A-2” rating “reflect(s) CMP’s low-risk business strategy and excellent business profile and [is] tempered by an aggressive financial position that may come under pressure since the company has begun expanding its transmission system and increased its short-term financing needs.”
