Research Update: Constellation Energy Generation LLC Upgraded To 'BBB' On Nuclear Credits Imparted By Congress; Outlook Positive

In S&P Global Ratings' view, the passage of the Inflation Reduction Act (IRA) legislation is a material credit positive for Constellation Energy Generation LLC. We think the nuclear production tax credits (PTCs) provisions in the Act provide long-term visibility into cash flows for Constellation's nuclear generators and benefit for potential future hydrogen production. As a result, we raised our issuer credit rating (ICR) on Constellation to 'BBB' from 'BBB-', reflecting our view of a material improvement in the company's business risk profile. The outlook remains positive, reflecting our view that Constellation's business risk will continue to improve over time and leverage will remain low. Although leverage could be temporarily elevated due to M&A activity, we expect the company to have

...- In S&P Global Ratings' view, the passage of the Inflation Reduction Act (IRA) legislation is a material credit positive for Constellation Energy Generation LLC. We think the nuclear production tax credits (PTCs) provisions in the Act provide long-term visibility into cash flows for Constellation's nuclear generators and benefit for potential future hydrogen production. - As a result, we raised our issuer credit rating (ICR) on Constellation to '###' from '###-', reflecting our view of a material improvement in the company's business risk profile. - The outlook remains positive, reflecting our view that Constellation's business risk will continue to improve over time and leverage will remain low. Although leverage could be temporarily elevated due to M&A activity, we expect the company to have robust cash flows with minimal volatility due to the nuclear credits and a price floor provided by the recently announced PTCs. We expect Constellation will maintain adjusted funds from operations...

Research Update