Research Update: Fortis Inc. And Subsidiaries Outlooks Revised To Negative On Rising Physical Risks, Ratings Affirmed

Following our review of Fortis Inc., we now assess about 25% of its business as having elevated exposure to physical events, including wildfires, storms, hurricanes, and flooding. Because of climate change, we expect that these risks will continue to rise, increasing the company's business risk. To reflect this rising risk, we revised our funds from operations (FFO) to debt downgrade threshold for Fortis to 12.0% from 10.5%. As such, we revised our outlook on the company and its subsidiaries to negative from stable and affirmed all of our ratings, including our 'A-' issuer credit rating (ICR) on Fortis. The negative outlook on Fortis and its subsidiaries reflects the rising physical risks across its service territories, including from wildfires, storms, hurricanes,

...- Following our review of Fortis Inc., we now assess about 25% of its business as having elevated exposure to physical events, including wildfires, storms, hurricanes, and flooding. Because of climate change, we expect that these risks will continue to rise, increasing the company's business risk. - To reflect this rising risk, we revised our funds from operations (FFO) to debt downgrade threshold for Fortis to 12.0% from 10.5%. - As such, we revised our outlook on the company and its subsidiaries to negative from stable and affirmed all of our ratings, including our 'A-' issuer credit rating (ICR) on Fortis. - The negative outlook on Fortis and its subsidiaries reflects the rising physical risks across its service territories, including from wildfires, storms, hurricanes, or flooding in Alberta, Arizona, British Columbia, the Caribbean islands, Prince Edward Island, and the Turks and Caicos. We expect the company's consolidated FFO to debt will be in the 11%-12% range through 2025, which...

Research Update