...Credit Metrics: After two years of improvement, leverage measures will likely weaken through 2016 as Delmarva Power & Light Company (DPL) avoids base rate filings while regulators review the pending merger of DPL's parent, PEPCO Holdings, Inc. (PHI), and Exelon Corp. (EXC). Fitch Ratings expects FFO-adjusted leverage and debt/EBITDAR to approximate 4.2x and 5.0x, respectively, in 2016 and improve to about 3.8x and 4.6x in 2018. FFO fixed-charge coverage is expected to decline to about 4.4x in 2016 and improve to about 5.0x in 2018. Exelon Merger: The pending merger between PHI and EXC has no direct effect on DPL's credit quality, but does provide a stronger, better-capitalized parent with far greater financial flexibility. Moreover, Fitch anticipates DPL to benefit from improved operating efficiency and lower costs as a result of the merger. Nonetheless, rate case avoidance and a likely package of ratepayer benefits will adversely affect cash flow in the near term. Rate Increases: Since...
