Fitch Ratings has affirmed the Long-term Issuer Default Rating (IDR) of
WEC Energy Group, Inc. (WEC) at 'BBB+' and the Long-term IDRs of WEC's
utility subsidiaries as follows: Wisconsin Electric Power Co. (WEPCO) at
'A'; Wisconsin Gas LLC (WI Gas) at 'A-' and Elm Road Generating Station
Supercritical LLC (ERGSS) at 'A'.
Fitch has also affirmed the Long-term IDRs of WEC's wholly-owned
intermediate holding company Integrys Holding, Inc. (Integrys) and
Integrys' utility subsidiaries as follows: Integrys at 'BBB+'; Wisconsin
Public Service Corp. (Wisconsin Public Service) at 'A'; Peoples Gas
Light & Coke Co. (Peoples Gas) at 'A-'; and North Shore Gas Co. (North
Shore Gas) at 'A'.
The Rating Outlook for all entities is Stable. A full list of rating
actions follows at the end of this release.
KEY RATING DRIVERS
WEC
Regulatory Diversification: WEC's credit profile benefits from
regulatory scale and earnings and cash flow diversity provided by the
ownership of seven regulated electric and natural gas utility
businesses, including Integrys' five wholly-owned subsidiaries. The
utilities operate in the relatively supportive regulatory jurisdictions
of Wisconsin, Illinois, Michigan, Minnesota and the Federal Energy
Regulatory Commission (FERC) via WEC's 60% ownership in American
Transmission Co. (ATC; 'A'/Stable Outlook). Wisconsin is estimated to
represent approximately 75% of WEC's rate base, with FERC and Illinois
contributing about 11% and 12% of projected rate base, respectively. The
smaller Michigan and Minnesota Integrys utilities are projected to
represent a modest 2% of consolidated rate base.
The ownership of gas local distribution companies (LDCs) in Illinois,
and on a smaller scale, LDCs in Michigan and Minnesota, provide cash
flow stability and earnings growth through committed investments in
upgrades of gas infrastructure over the next several years. Management
estimates the proportion of gas utility in the earnings mix to grow to
26% from 17% pre-Integrys acquisition.
Furthermore, management expects investments in transmission rate base to
continue to grow over the next few years, despite the anticipated
reduction in the allowed ROE for Midcontinent Independent System
Operator (MISO) transmission owners as a result of a complaint case
pending before the FERC.
Balanced Regulatory Compact: Fitch views the Wisconsin regulatory
compact as generally supportive of utility credit quality, as evidenced
by the favorable rate decisions state utilities received in prior rate
cases, including credit-supportive authorized ROEs. Constructive
regulatory mechanisms include forward-looking test years, pre-approval
of large projects, a partial cash return on construction work in
progress (CWIP) for infrastructure investments, and annual fuel
adjustments. The merger provisions, which include an earnings cap at
WEPCO and WI Gas, are expected to remain manageable within the current
financial profile.
In Illinois, the gas utilities benefit from constructive tariff
mechanisms, including a purchased gas adjustment, decoupling, and riders
for bad debt expense and manufactured gas plant remediation costs.
Importantly, Peoples Gas can timely recover, via a rider, costs
associated with its gas system modernization program in Chicago. The
rider is in effect from 2014 through 2023 with annual review by the
Illinois Commerce Commission (ICC).
High Parent Leverage: Combined parent-level debt represents
approximately 30% of WEC consolidated debt. About 20% of parent debt is
related to WEC. Management has indicated they intend to reduce parent
debt over time but has not established specific targets. Fitch would
view efforts of active deleveraging over the forecast period as
supportive of credit quality.
Manageable Capex: Management plans to spend approximately $9.2 billion
over the next five years on capex, including roughly 54% allocated
toward the gas segment and 27% towards the electric segment, with the
remainder consisting of generation. Capital investments associated with
WEC's partial ownership of ATC are projected to total $933 million over
2016 - 2018, further supporting rate base growth. Utility capital
investments will primarily be earmarked towards environmental upgrades,
incremental generation, and enhancement of distribution networks and gas
pipeline replacements.
Significant projects include the upgrade of Wisconsin Public Service's
aging infrastructure, a $220 million investment from 2014 - 2018 with a
proposed $200 million extension for 2018 -2021, and Peoples Gas' gas
system modernization program, a $250 million to $280 million average
annual investment.
To address reliability needs in the Upper Peninsula of Michigan, WEC is
proposing to build approximately 170 MW of natural gas-fired generation.
The estimated $255 million investment will be made by Upper Michigan
Energy Resources Corp. (UMERC), a newly formed utility that would
include WEPCO and Wisconsin Public Service's electric and gas
distribution assets in the Peninsula. WEC has reached an uncontested
settlement agreement with the Michigan Public Service Commission staff,
the Michigan Attorney General (AG) and other interveners, approving the
formation of UMERC. WEC expects the utility to commence operation on
Jan. 1, 2017. The incremental generation is targeted to come online in
2019, which would subsequently allow for the retirement of the Presque
Isle Power Plant.
Fitch expects capex to be financed in a conservative manner, with a
balanced mix of internally generated cash flows and debt.
Adequate Credit Metrics: Fitch projects consolidated FFO-adjusted
leverage and adjusted debt/EBITDAR to average 4x and 3.8x, respectively,
over 2016 - 2020. As of TTM Q216, FFO and EBITDAR leverage ratios were
3.7x and 4x, respectively.
WEPCO
Low-Risk Business Model: WEPCO's ratings reflect the low-risk business
profile of its regulated utility businesses that operate in what Fitch
considers to be constructive regulatory frameworks across the regulatory
jurisdictions of Wisconsin and Michigan. Wisconsin is the largest
contributor to WEPCO's electric revenues at 83% in 2015, while Michigan
accounts for approximately 5%.
Balanced Regulatory Compact: Fitch views the Wisconsin regulatory
framework to be generally supportive of credit quality. Constructive
regulatory mechanisms include forward-looking test years; a partial CWIP
for infrastructure investments; annual fuel rate adjustments; bad debt
escrow accounting; and credit-supportive ROEs. WEPCO's authorized ROE of
10.2% is above the 9.58% national average ROE recorded for electric
utilities in 2015.
Sustained Elevated Capex: Management plans to spend approximately $1.70
billion on utility capex over 2016 - 2018 compared with approximately
$1.56 billion over the previous three years. Capex is earmarked
primarily toward the upgrade of WEPCO's electric and gas base
infrastructure. Projects are smaller in scope relative to the large
renewable generation and environmental capital spending of prior years.
Fitch has assumed capex will be funded in a manner consistent with the
authorized regulatory capital structure, reflecting a 51% common equity
ratio.
Stable Credit Metrics: WEPCO's credit metrics are sound for the current
rating category. Adjusted debt/EBITDAR is projected to be in the mid to
high 3x, while FFO-adjusted leverage is expected to be in the high 3x to
low 4x. Fitch's projections assume rate relief after 2017. As of TTM
Q216, FFO and EBITDAR leverage ratios were 3.8x and 3.5x, respectively.
Regulatory Concessions and Savings: Fitch believes merger concessions
are manageable within WEPCO's financial profile. Concessions include a
three-year earnings cap and sharing mechanism, effective in 2016, under
which 50% of the first 50bps of earnings above the 10.2% authorized ROE
would be shared with ratepayers and used to reduce the utility's
transmission escrow. All additional earnings above the first 50bps will
be used to pay down the transmission escrow. Merger savings, including
reductions in staffing levels and consolidation of IT infrastructure
across the corporate family, allowed WEPCO to avoid the filing of a
Wisconsin base rate case in 2016.
WI Gas
Constructive Multi-Year Rate Plan: WI Gas operates in the second year of
its two-year rate plan, which provided base rate increases of $17.1
million in 2015 and $21.4 million in 2016. The rate relief allows for
timely recovery of spending on the Western Gas Lateral project, which
was completed in 2015. Under WI Gas' earnings sharing mechanism
effective in 2016, 50% of the first 50bps of earnings above the 10.3%
authorized ROE would be shared with ratepayers and used to reduce the
costs of the Western Gas Lateral recovered from customers. All
additional earnings above the first 50bps will be used towards reducing
the costs recovered from customers.
Capex Trending Down: Fitch forecasts capex to amount to approximately
$460 million over 2016 - 2018 compared with $526 million over the prior
three years. The lower projected capex primarily reflects the completion
of the Western Gas Lateral project in 2015 for approximately $130
million. Future capex is primarily earmarked toward upgrade of gas
infrastructure. Fitch has assumed capex will be funded in a manner
consistent with the authorized regulatory capital structure, reflecting
a 48.91% common equity ratio.
Adequate Credit Metrics: Fitch projects WI Gas' adjusted debt/EBITDAR to
average roughly 3.6x over 2016 - 2020, while FFO-adjusted leverage is
expected to hover in the low 4x. As of TTM Q216, FFO and EBITDAR
leverage ratios were 2.9x and 3.3x, respectively.
ERGSS
The ratings of ERGSS reflect the credit quality of WEPCO. ERGSS services
its debt obligations with the rental payments it receives from WEPCO
related to the lease of the Power the Future (PTF) generating plants.
Integrys
WEC Ownership: Ownership by WEC provides Integrys with enhanced
financial flexibility to manage its capital structure, and expands
earnings and cash flow capabilities through increased FERC exposure and
potential long-term operational efficiencies provided by a larger group
with complementary businesses.
Conservative Business Model: Integrys' ratings reflect the stable and
predictable operating cash flows derived from its ownership of five
low-risk regulated electric and gas utilities that operate in balanced
regulatory jurisdictions of Wisconsin, Illinois, Michigan, and
Minnesota. Wisconsin is the primary driver of earnings with Wisconsin
Public Service representing approximately 44% of Integrys consolidated
EBITDA as of the TTM Q2 2016. Integrys' financial profile further
benefits from operating two LDCs in Illinois, which are estimated to
represent nearly 43% of Integrys EBITDA on a TTM basis, primarily
contributed by Peoples Gas. The Michigan and Minnesota utilities'
earnings contributions are not estimated to be significant. The sale of
the unregulated compressed natural gas business in the first quarter of
2016 further supports Integrys' low business risk.
Elevated Capex: Integrys plans on spending nearly $1 billion annually on
capital investments, which is higher than historical norms. Capex is
primarily driven by investments in environmental control, electric base
infrastructure and gas main replacement. Fitch expects utilities to fund
capex in a manner that is consistent with their authorized regulatory
capital structures, using a balanced mix of internal cash flows, debt,
and parent cash infusions as needed.
Solid Credit Metrics: Fitch estimates FFO-adjusted leverage and adjusted
debt/EBITDAR to average 3.3x and 3.5x, respectively, over 2016 - 2020.
As of TTM Q216, FFO and EBITDAR leverage ratios were 3.3x and 3.8x,
respectively.
Wisconsin Public Service
Low-Risk Business Model: Wisconsin Public Service's ratings reflect the
low-risk business profile of its utility businesses that operate in what
Fitch considers to be constructive regulatory frameworks in Wisconsin
and Michigan. Wisconsin is the largest contributor to electric revenues,
at approximately 82% in 2015. Wisconsin rate design features timely
recovery of fuel and commodity costs, and a gas cost recovery mechanism
that stabilizes earnings and cash flows.
Balanced Rate Order: Fitch considers Wisconsin Public Service's last
rate order in Wisconsin to be relatively balanced, despite the utility
receiving rate reductions in its electric and gas businesses. The
utility was required to reduce electric and gas retail rates by $7.9
million and $6.2 million, respectively, effective Jan. 1, 2016. The rate
reductions primarily resulted from updates to fuel and purchased power
expenses, which are almost entirely passed through to ratepayers.
On a credit positive note, the utility received a 10% authorized ROE and
was permitted to increase the fixed monthly charge for its residential
customers to $21 from $19. As a result of the WEC acquisition, The
Public Service Commission of Wisconsin (PSCW) also revised the dividend
restrictions established in the utility's prior rate case. Wisconsin
Public Service cannot upstream dividends in the event that its common
equity ratio falls below the authorized level of 51% on a financial
basis. Fitch considers the dividend restrictions to be supportive of
credit quality.
High Capex: Management estimates capital spending to total approximately
$932.5 million over 2016 - 2018. By contrast, the utility spent roughly
$929 million over 2013 - 2015, and a materially lesser amount of $358
million over 2010 - 2012. Capex is earmarked toward the installation of
pollution-control equipment at the Weston Unit 3 generating facility.
The environmental upgrade at the Weston plant is projected by management
to cost approximately $345 million and to be completed in 2016.
Wisconsin Public Service is allowed to defer costs that are above the
originally authorized $275 million level through 2017, and the utility
will be required to obtain a separate approval for collection of these
deferred costs.
Capex is also driven by the upgrade of the utility's transmission and
distribution infrastructure through its System Modernization and
Reliability Project, which includes converting more than 1,000 miles of
overhead distribution power lines to underground in Northern Wisconsin
and adding distribution automation equipment on 400 miles of lines.
Capital investments on the project amount to approximately $135 million
over 2016 - 2018. Fitch expects Wisconsin Public Service to fund capex
using a balanced mix of internal cash flows, debt, and equity
contributions from Integrys.
Adequate Credit Metrics: Fitch projects Debt/EBITDAR and FFO-adjusted
leverage to average 3.4x and 3.6x, respectively, over 2016 - 2020. As of
TTM Q216, FFO and EBITDAR leverage ratios were 3.7x and 4.1x,
respectively.
Peoples Gas
Balanced Regulation: Peoples Gas benefits from credit-supportive
regulatory mechanisms, including a purchased gas adjustment clause that
allows for full and timely recovery of gas commodity costs, riders for
gas pipeline replacement and bad debt expenses and a decoupling
mechanism that breaks the link between sales and margins. Peoples Gas'
last rate order was constructive, with the utility receiving
approximately 70% of its revised rate request.
Base Rate Freeze: Fitch does not expect the two-year base rate freeze to
bear a material impact on the utility's financial profile. The earnings
and cash flow benefit from the last rate order and efficient cost
control should support a sound credit profile in 2016.
High Capex: Management projects to spend approximately $1.09 billion
over 2016 - 2018, compared with $923 million over the prior three years.
The primary driver of capex is the 20-year gas system modernization
program to modernize natural gas infrastructure in Chicago. Peoples Gas
expects to invest between $250 million to $280 million annually over the
next three years. Favorably, the utility benefits from the Qualified
Infrastructure Plant (QIP) rider, which provides near-immediate cash
return on capital investments in gas pipeline replacement.
Investigation Settlement: The $18.5 million settlement agreement reached
by Peoples Gas with the ICC and state AG related to investigations of
the utility's past management of the infrastructure replacement program
is manageable within the existing credit profile. Importantly, it
alleviates concerns of event risk and sizeable fines that could have
resulted from the investigations. The proceedings followed allegations
from consumer groups and the AG of mismanagement and improprieties by
the utility's past management in its handling of the program, which led
to material cost overruns.
Sound Credit Metrics: Fitch expects FFO and EBITDAR leverage metrics to
be range bound at 3.5x to 4x over 2016 - 2020. As of TTM Q216, FFO and
EBITDAR leverage ratios were 4.1x and 3.1x, respectively.
North Shore Gas
Balanced Regulation: North Shore Gas benefits from credit-supportive
regulatory mechanisms, including a purchased gas adjustment clause that
allows for full and timely recovery of gas commodity costs, riders for
environmental remediation and bad debt expenses and a decoupling
mechanism that breaks the link between sales and margins. The last rate
order was relatively balanced, with the utility receiving about 55% of
its revised rate request.
Base Rate Freeze: Fitch does not expect the two-year base rate freeze to
bear a material impact on the utility's financial profile. The earnings
and cash flow benefit from the last rate order and efficient cost
control should support the utility's sound credit profile in 2016.
Manageable Capex: Management plans on spending between $25 million and
$30 million annually on capital investments over 2016 - 2018, compared
with $96 million spent over the prior three years. Capex is primarily
earmarked for the upgrading of the natural gas pipe distribution system.
The utility expects to fund capex with a mix of internal cash flows,
debt and parent equity infusions.
Sound Credit Metrics: FFO and EBITDAR leverage ratios are projected to
average roughly 3.6x over 2016 - 2020. As of TTM Q216, FFO and EBITDAR
leverage ratios were 2.5x and 2.3x, respectively.
Small Size within Corporate Structure: North Shore Gas is one of the
smallest utilities in the WEC family, representing approximately 2% of
consolidated EBITDA at year-end 2015. As a result of its size, the
utility does not rely on a corporate credit facility or CP market to
fund liquidity requirements. It relies on intercompany borrowings from
WEC and sister affiliate Peoples Gas for its liquidity, which leaves it
exposed to the credit quality of those entities. However, given the
strong financial profiles of both WEC and Peoples Gas, Fitch does not
consider access to liquidity a material credit concern for North Shore
Gas at this time.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case are as follows:
WEPCO
--No base rate increase through 2017;
--Retail sales growth of 0.5% annually;
--$1.7 billion capex 2016 - 2018;
--$40 to $50 million annual ATC cash distributions 2016 - 2020.
WI Gas
--Base rate increases per the last rate order;
--Retail sales growth of 0.5% annually;
--$460 million capex 2016 - 2018.
Wisconsin Public Service
--Rate relief per 2016 rate order;
--Retail Sales growth of 0.5% annually;
--$932.5 million capex 2016 - 2018.
Peoples Gas
--Base rate freeze through 2017;
--QIP rider increases 2016 - 2020;
--$18.5 million fine due to settlement;
--$1.09 billion capex 2016 - 2018.
North Shore Gas
--Base rate freeze through 2017;
--$25 to $30 million per annum capex 2016 - 2018.
RATING SENSITIVITIES FOR WEC
Positive: Future developments that may, individually or collectively,
lead to a positive action include:
Deleveraging efforts that result in FFO lease-adjusted leverage to
improve to near 3.5x on a sustained basis.
Negative: Future developments that may, individually or collectively,
lead to a negative action include:
--A more aggressive financial management policy that results in
incremental parent leverage;
--Unfavorable regulatory developments that lead to a deterioration of
utilities' financial profiles;
--FFO lease-adjusted leverage ratio between 5x to 5.2x on a sustained
basis.
RATING SENSITIVITIES FOR WEPCO
Positive: Future developments that may, individually or collectively,
lead to a positive action include:
--Given current rating levels and a sustained elevated capex program
over the forecast period, positive rating actions are unlikely in the
near term.
Negative: Future developments that may, individually or collectively,
lead to a negative action include:
--Although not anticipated by Fitch, deterioration of the regulatory
compact could lead to negative rating actions;
--Adjusted debt/EBITDAR over 4x on a sustained basis.
RATING SENSITIVITIES FOR WI GAS
Positive: Future developments that may, individually or collectively,
lead to a positive action include:
--Given current rating levels and elevated capex over the forecast
period, positive rating actions are unlikely in the near term.
Negative: Future developments that may, individually or collectively,
lead to a negative action include:
--Although not anticipated by Fitch, deterioration of the regulatory
compact could lead to negative rating actions;
--Adjusted debt/EBITDAR over 4x or FFO lease-adjusted leverage over 4.5x
on a sustained basis.
RATING SENSITIVITIES FOR INTEGRYS
Positive: Future developments that may, individually or collectively,
lead to a positive action include:
--Given comparable credit profiles, a positive action at WEC;
--Deleveraging efforts that result in FFO lease-adjusted leverage to
improve to near 3.5x on a sustained basis.
Negative: Future developments that may, individually or collectively,
lead to a negative action include:
--Unfavorable regulatory developments in Wisconsin or Illinois that lead
to a deterioration of utilities' financial profiles;
--FFO lease-adjusted leverage between 5x to 5.2x on a sustained basis;
--A more aggressive financial management policy from WEC that creates
added financial pressure on Integrys to upstream dividends.
RATING SENSITIVITIES FOR WISCONSIN PUBLIC SERVICE
Positive: Future developments that may, individually or collectively,
lead to a positive action include:
--Given current rating levels and elevated capex over the forecast
period, positive rating actions are unlikely in the near term.
Negative: Future developments that may, individually or collectively,
lead to a negative action include:
--Unfavorable regulatory developments;
--Adjusted debt/EBITDAR over 4x or FFO lease-adjusted leverage above
4.5x on a sustained basis.
RATING SENSITIVITIES FOR PEOPLES GAS
Positive: Future developments that may, individually or collectively,
lead to a positive action include:
--Given high projected capex, a positive rating action is unlikely in
the near-term. However, FFO lease-adjusted leverage below 3.5x or
adjusted debt/EBITDAR below 3.2x on a sustained basis could trigger
positive actions.
Negative: Future developments that may, individually or collectively,
lead to a negative action include:
--Unfavorable regulatory developments;
--FFO lease-adjusted leverage over 4.5x on a sustained basis.
RATING SENSITIVITIES FOR NORTH SHORE GAS
Positive: Future developments that may, individually or collectively,
lead to a positive action include:
--Given current rating levels, no positive rating action is likely in
the near term.
Negative: Future developments that may, individually or collectively,
lead to a negative action include:
--Deterioration of the regulatory compact;
--Inability to receive short-term funding from Integrys or Peoples Gas
in the event of a liquidity crisis;
--FFO lease-adjusted leverage over 4x on a sustained basis.
LIQUIDITY
At June 30, 2016, WEC and its subsidiaries had approximately $32 million
of cash and cash equivalents and approximately $1.55 billion of unused
committed credit arrangements with banks. The unused credit capacity is
allocated to provide liquidity support to the group's CP programs.
Approximately $928 million of CP borrowings were outstanding at June 30,
2016.
Each utility within the combined group has access to their own unsecured
credit facility except smaller entities: North Shore Gas, Michigan Gas
Utilities (MGU), and Minnesota Energy Resources (MER), who meet their
short-term liquidity needs through intercompany borrowings with the
parent company. North Shore Gas can borrow up to $50 million with
Integrys and up to $50 million with sister affiliate Peoples Gas. In
addition, Peoples Gas can borrow up to $150 million from Integrys and up
to $50 million from North Shore Gas.
Financial covenants include maintaining a debt-to-total capitalization
ratio no greater than 65% for WEPCO, WI Gas, Integrys, Wisconsin Public
Service, and Peoples Gas. WEC must maintain a debt-to-total
capitalization ratio that is no greater than 70%. At June 30, 2016, all
entities were in compliance with the covenants.
FULL LIST OF RATING ACTIONS
Fitch affirms the following ratings with a Stable Outlook:
WEC
--Long-term IDR at 'BBB+';
--Short-term IDR at 'F2';
--Commercial Paper at 'F2';
--Senior unsecured debt at 'BBB+';
--Junior subordinated notes at 'BBB-'.
WEPCO
--Long-term IDR at 'A';
--Short-term IDR at 'F1';
--Commercial Paper at 'F1';
--Senior unsecured debt at 'A+';
--Preferred stock at 'A-'.
WI Gas
--Long-term IDR at 'A-';
--Short-term IDR at 'F2';
--Commercial Paper at 'F2';
--Senior unsecured debt at 'A'.
ERGSS
--Long-term IDR at 'A';
--Senior unsecured debt at 'A+'.
Wisconsin Energy Capital Corp.
--Senior unsecured debt at 'BBB+'.
Integrys Holding
--Long-term IDR at 'BBB+';
--Short-term IDR at 'F2';
--Commercial Paper at 'F2';
--Senior unsecured debt at 'BBB+';
--Junior subordinated notes at 'BBB-'.
Wisconsin Public Service
--Long-term IDR at 'A';
--Short-term IDR at 'F1';
--Commercial Paper at 'F1';
--Senior unsecured debt at 'A+';
--Preferred stock at 'A-'.
Peoples Gas
--Long-term IDR at 'A-';
--Short-term IDR at 'F2';
--Commercial Paper at 'F2';
--Senior secured debt at 'A+'.
North Shore Gas
--Long-term IDR at 'A';
--Senior secured debt at 'AA-'.
SUMMARY OF FINANCIAL ADJUSTMENTS
-WEPCO adjusted debt: Fitch has adjusted the debt by treating a
percentage of the present value of the on-balance sheet capital lease
obligation to affiliate We Power, LLC (We Power) as a debt equivalent in
calculating WEPCO leverage metrics. The adjustment reflects the high
level of regulatory recovery associated with the lease payments to We
Power.
Additional information is available on www.fitchratings.com.
Applicable Criteria
Criteria for Rating Non-Financial Corporates (pub. 27 Sep 2016)
https://www.fitchratings.com/site/re/885629
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1014453
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1014453
Endorsement Policy
https://www.fitchratings.com/regulatory
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM.
PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
WEBSITE.
Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its
subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone:
1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or
retransmission in whole or in part is prohibited except by permission.
All rights reserved. In issuing and maintaining its ratings and in
making other reports (including forecast information), Fitch relies on
factual information it receives from issuers and underwriters and from
other sources Fitch believes to be credible. Fitch conducts a reasonable
investigation of the factual information relied upon by it in accordance
with its ratings methodology, and obtains reasonable verification of
that information from independent sources, to the extent such sources
are available for a given security or in a given jurisdiction. The
manner of Fitch's factual investigation and the scope of the third-party
verification it obtains will vary depending on the nature of the rated
security and its issuer, the requirements and practices in the
jurisdiction in which the rated security is offered and sold and/or the
issuer is located, the availability and nature of relevant public
information, access to the management of the issuer and its advisers,
the availability of pre-existing third-party verifications such as audit
reports, agreed-upon procedures letters, appraisals, actuarial reports,
engineering reports, legal opinions and other reports provided by third
parties, the availability of independent and competent third- party
verification sources with respect to the particular security or in the
particular jurisdiction of the issuer, and a variety of other factors.
Users of Fitch's ratings and reports should understand that neither an
enhanced factual investigation nor any third-party verification can
ensure that all of the information Fitch relies on in connection with a
rating or a report will be accurate and complete. Ultimately, the issuer
and its advisers are responsible for the accuracy of the information
they provide to Fitch and to the market in offering documents and other
reports. In issuing its ratings and its reports, Fitch must rely on the
work of experts, including independent auditors with respect to
financial statements and attorneys with respect to legal and tax
matters. Further, ratings and forecasts of financial and other
information are inherently forward-looking and embody assumptions and
predictions about future events that by their nature cannot be verified
as facts. As a result, despite any verification of current facts,
ratings and forecasts can be affected by future events or conditions
that were not anticipated at the time a rating or forecast was issued or
affirmed.
The information in this report is provided "as is" without any
representation or warranty of any kind, and Fitch does not represent or
warrant that the report or any of its contents will meet any of the
requirements of a recipient of the report. A Fitch rating is an opinion
as to the creditworthiness of a security. This opinion and reports made
by Fitch are based on established criteria and methodologies that Fitch
is continuously evaluating and updating. Therefore, ratings and reports
are the collective work product of Fitch and no individual, or group of
individuals, is solely responsible for a rating or a report. The rating
does not address the risk of loss due to risks other than credit risk,
unless such risk is specifically mentioned. Fitch is not engaged in the
offer or sale of any security. All Fitch reports have shared authorship.
Individuals identified in a Fitch report were involved in, but are not
solely responsible for, the opinions stated therein. The individuals are
named for contact purposes only. A report providing a Fitch rating is
neither a prospectus nor a substitute for the information assembled,
verified and presented to investors by the issuer and its agents in
connection with the sale of the securities. Ratings may be changed or
withdrawn at any time for any reason in the sole discretion of Fitch.
Fitch does not provide investment advice of any sort. Ratings are not a
recommendation to buy, sell, or hold any security. Ratings do not
comment on the adequacy of market price, the suitability of any security
for a particular investor, or the tax-exempt nature or taxability of
payments made in respect to any security. Fitch receives fees from
issuers, insurers, guarantors, other obligors, and underwriters for
rating securities. Such fees generally vary from US$1,000 to US$750,000
(or the applicable currency equivalent) per issue. In certain cases,
Fitch will rate all or a number of issues issued by a particular issuer,
or insured or guaranteed by a particular insurer or guarantor, for a
single annual fee. Such fees are expected to vary from US$10,000 to
US$1,500,000 (or the applicable currency equivalent). The assignment,
publication, or dissemination of a rating by Fitch shall not constitute
a consent by Fitch to use its name as an expert in connection with any
registration statement filed under the United States securities laws,
the Financial Services and Markets Act of 2000 of the United Kingdom, or
the securities laws of any particular jurisdiction. Due to the relative
efficiency of electronic publishing and distribution, Fitch research may
be available to electronic subscribers up to three days earlier than to
print subscribers.
For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia
Pty Ltd holds an Australian financial services license (AFS license no.
337123) which authorizes it to provide credit ratings to wholesale
clients only. Credit ratings information published by Fitch is not
intended to be used by persons who are retail clients within the meaning
of the Corporations Act 2001.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161107006634/en/
Copyright Business Wire 2016