Fortis TCI Ltd.

The negative outlook reflects S&P Global Ratings' view of FTCI's weak financial measures as the utility recovers costs related to hurricanes Irma and Maria. In 2018, adjusted funds from operations (FFO) to debt was about 10.4%, consistent with our expectations. Under our base-case scenario, we expect FFO to debt improve to about 14% in 2019 and 15% in 2020. We could downgrade FTCI within the next 12 months if adjusted FFO to debt stays consistently below 15% with no prospect for improvement. This could occur if financial measures are not supported by incremental equity over the forecast period, adverse regulatory decisions delay or disallow cost recovery, or further operational difficulties from hurricanes lead to unexpected cost and debt increase. We

...The company benefits from being part of the Fortis group. Fortis TCI Ltd. (FTCI) is a subsidiary of Fortis Inc., a large holding utility company. FTCI benefits from being part of the group, sharing best practices and management experience. FTCI also receives a one-notch uplift to the rating. Exposure to weather and economic risks affect credit metrics, electricity consumption, and FTCI revenue. FTCI is in the Caribbean region, which is prone to hurricanes. This was evident in 2017, when hurricanes Irma and Marie hit the island. Extreme weather could stress credit metrics in the short term and make cash flow volatile. In addition, the company's main economic drivers are tourism and financial services, which account for half of the country's GDP. This also exposes the utility to global economic downturn that could impact electricity consumption and revenue. Regulatory framework is less robust compared to peers.FTCI operates under a 50-year licensing agreement with rates based on a cost-of-service-style...

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