Research Update: American Electric Power Ratings Affirmed; Kentucky Power Downgraded To 'BBB' On Weaker Financials; Outlook Stable

On April 17, 2023, American Electric Power Co. Inc. (AEP) and Liberty Utilities Co. mutually agreed to terminate the sale of Kentucky Power Co. (KPCo). As such, we affirmed our ratings on AEP, including its 'A-' long-term issuer credit rating (ICR). The outlook remains stable. Simultaneously, we lowered the ICR and issue-level ratings on KPCo by one notch to 'BBB' from 'BBB+'. At the same time, we removed KPCo ratings from CreditWatch, where we placed them with negative implications on Oct. 28, 2021. The outlook is stable. Our stable outlook on AEP reflects our expectations that the company's financial measures will improve but will consistently reflect very minimal financial cushion from its downgrade threshold. We expect the company will continue

...- On April 17, 2023, American Electric Power Co. Inc. (AEP) and Liberty Utilities Co. mutually agreed to terminate the sale of Kentucky Power Co. (KPCo). - As such, we affirmed our ratings on AEP, including its 'A-' long-term issuer credit rating (ICR). The outlook remains stable. - Simultaneously, we lowered the ICR and issue-level ratings on KPCo by one notch to '###' from '###+'. At the same time, we removed KPCo ratings from CreditWatch, where we placed them with negative implications on Oct. 28, 2021. The outlook is stable. - Our stable outlook on AEP reflects our expectations that the company's financial measures will improve but will consistently reflect very minimal financial cushion from its downgrade threshold. We expect the company will continue to prudently manage its regulatory risk such that it consistently maintains funds from operations (FFO) to debt that is at or slightly above 16% through 2025....

Research Update