Fortis Inc.

The negative outlook continues to reflect S&P Global Ratings' view of Fortis' weak financial metrics over the next 12 months, pushing back our expectation for financial improvement. In addition, the outlook reflects the risk of any adverse regulatory outcomes, including the pending FERC decision on ITC's base ROE, could further stress credit metrics. During our two-year outlook period, we forecast the company's adjusted funds from operations (FFO)-to-debt ratio at just about 10%. We could take a negative rating action on Fortis if we project the company's FFO-to-debt ratio to stay below 10%. This could happen if the company experiences material delays and cost overruns in executing its capital programs, material adverse regulatory decisions, and significant debt-funded acquisitions or operational difficulties

...S&P Global Ratings expects Fortis' credit metrics to remain weak in 2019 with limited cushion. We expect Fortis' large capital spending and a 2018 Federal Energy Regulatory Commission's (FERC) decision to reduce the return on equity (ROE) incentive adder ("ROE adder") at subsidiary ITC Holdings Corp. (ITC) to weaken Fortis Inc.'s credit metrics in 2019. Elevated capital spending plan over the outlook period. The company's capital program from 2019 to 2021 is about 20% more in total compared to our previous forecast, leading to higher execution risks that could pressure credit metrics during the construction phase. Strong regulated utility operations with minimal exposure to nonregulated activities.We expect Fortis' large and diversified portfolio of regulated utility operations across the U.S., Canada, and the Caribbean to provide it with sufficient diversity, which in part supports our assessment of the company's excellent business risk. With the sale of the Waneta asset, we expect the...

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