...Texas Subsidiaries Merged: AEP Texas Central Co. (TCC) and AEP Texas North Co (TNC) were legally combined as of Dec. 31, 2016 into AEP Texas, Inc. Fitch Ratings expects modest financial synergies given that TCC and TNC were previously managed as one entity. The merger is expected to produce benefits from improved access and cost of financings, and reduction in regulatory and financial reporting costs. Pressured Credit Metrics: Fitch expects AEP Texas Inc.'s adjusted debt/EBITDAR to remain elevated at around 4.5x over the next several years. The company's 2017¡2019 capital expenditure forecast (released November 2016) reflects a 34% increase over the prior three-year forecast. Fitch expects that parent company, American Electric Power Company, Inc. (AEP), will make any necessary equity infusions to maintain credit metrics consistent with AEP Texas Inc.'s current ratings. AEP Texas is also likely to be more active in rate increase requests. Low-Risk Business Profile: AEP Texas Inc. owns and...
