KeySpan Gas East Corp.

The stable outlook on KEDLI reflects the outlook on National Grid. The stable outlook on National Grid reflects our view that it will be able to maintain its current financial profile. National Grid currently faces uncertainties regarding the impact of the recent political focus in New York and the U.K.'s next regulatory period starting April 2021. However, we believe National Grid is committed to maintaining the current rating, and that it would take measures needed to offset potential negative regulatory outcomes. We therefore expect National Grid will be able to post an adjusted FFO-to-debt ratio above 13% on a sustainable basis, which is commensurate with the current ratings. We could lower the rating on KEDLI if we lower the rating

...Our assessment of KeySpan Gas East Corp. (KEDLI) as a core subsidiary of National Grid PLC underpins the rating. Because KEDLI is a core subsidiary of National Grid, our issuer credit rating on KEDLI benefits from a one-notch uplift, bringing it in line with our group credit profile on National Grid. We assess KEDLI's business risk profile as excellent, albeit at a lower standing within the business risk profile category. Although KEDLI owns and operates a lower-risk gas distribution system in a generally constructive regulatory framework, we view it as somewhat less effective at managing the political and regulatory risks in New York compared with its peers in the state, as largely informed by the uncertainties presented by the political focus relating to National Grid's management of gas supply issues for KEDLI's service territory. We expect KEDLI's financial measures to remain firmly entrenched within the financial risk profile category. We forecast funds from operations (FFO) to debt...

Full Report