Research Update: Exelon Generation Co. LLC Downgraded To 'BBB-' From 'BBB' On Spin-Off From Parent Exelon Corp., Outlook Stable

Exelon Corp. has announced that it will spin off its supply subsidiary, Exelon Generation Co. LLC (ExGen), as an independent company. We now consider ExGen as non-strategic to Exelon. Consequently, our rating reflects the company's stand-alone credit profile. We still view ExGen's business risk profile (BRP) as satisfactory, albeit now in the lower end of that range. The cash flow impact of ExGen's recent performance in Texas influences our view of the company's BRP. As a result, we are lowering the issuer credit rating on Exelon Generation Co. LLC, to 'BBB-' from 'BBB'. The outlook is stable. We are also lowering our short-term ratings on ExGen to 'A-3' from 'A-2'. The stable outlook factors in adjusted funds from operations (FFO)

...- Exelon Corp. has announced that it will spin off its supply subsidiary, Exelon Generation Co. LLC (ExGen), as an independent company. - We now consider ExGen as non-strategic to Exelon. Consequently, our rating reflects the company's stand-alone credit profile. - We still view ExGen's business risk profile (BRP) as satisfactory, albeit now in the lower end of that range. The cash flow impact of ExGen's recent performance in Texas influences our view of the company's BRP. - As a result, we are lowering the issuer credit rating on Exelon Generation Co. LLC, to '###-' from '###'. The outlook is stable. - We are also lowering our short-term ratings on ExGen to 'A-3' from 'A-2'. - The stable outlook factors in adjusted funds from operations (FFO) to debt at, or above, 30% on a sustained basis through 2024. Similarly, we expect adjusted debt to EBITDA below 3.00x on a sustained basis and averaging about 2.85x through 2024....

Research Update