Research Update: American Electric Power Co. Inc. Outlook Revised To Negative On Weaker Financial Measures; Ratings Affirmed

Following our review of American Electric Power Co. Inc. (AEP), we lowered our expectations for the company's financial performance such that funds from operations (FFO) to debt will likely remain below our downgrade threshold of 16%. Kentucky Power Co.'s (KPCo) stand-alone financial measures materially weakened in 2023, reflecting the loss of customers and mild weather. As such, we expect that it will be increasingly challenging for the company's stand-alone financial measures to improve to consistently above its downgrade threshold of FFO to debt of 11%. As such, we revised our rating outlooks on AEP and its subsidiaries to negative from stable but affirmed all ratings, including AEP's 'A-' issuer credit rating (ICR). The negative outlook on AEP and its subsidiaries

...- Following our review of American Electric Power Co. Inc. (AEP), we lowered our expectations for the company's financial performance such that funds from operations (FFO) to debt will likely remain below our downgrade threshold of 16%. - Kentucky Power Co.'s (KPCo) stand-alone financial measures materially weakened in 2023, reflecting the loss of customers and mild weather. As such, we expect that it will be increasingly challenging for the company's stand-alone financial measures to improve to consistently above its downgrade threshold of FFO to debt of 11%. - As such, we revised our rating outlooks on AEP and its subsidiaries to negative from stable but affirmed all ratings, including AEP's 'A-' issuer credit rating (ICR). - The negative outlook on AEP and its subsidiaries (excluding KPCo) reflects our revised base case for potentially weaker consolidated financial measures, reflecting FFO to debt of 13%-15% through 2025. - The negative outlook on KPCo reflects its weakening stand-alone...

Research Update