Research Update: SEMCO Energy Inc. Upgraded To 'BBB' On Revised Group Rating Methodology, Ratings Removed From UCO, Outlook Stable

We have reviewed our ratings on SEMCO Energy Inc. that we labeled as under criteria observation (UCO) after publishing our revised Group Rating Methodology criteria on July 1, 2019. Following this review, we concluded that the cumulative value of the regulatory and structural protections between SEMCO and its ultimate parent, AltaGas Ltd., are sufficient to insulate our issuer credit rating on SEMCO from our group credit profile on AltaGas by as much as one notch. Therefore, we are raising our long-term issuer credit rating on SEMCO to 'BBB' from 'BBB-' and are removing our ratings on the company from UCO. At the same time, we are raising our issue-level rating on SEMCO's senior secured notes to 'A-' from 'BBB+'. The

...- We have reviewed our ratings on SEMCO Energy Inc. that we labeled as under criteria observation (UCO) after publishing our revised Group Rating Methodology criteria on July 1, 2019. - Following this review, we concluded that the cumulative value of the regulatory and structural protections between SEMCO and its ultimate parent, AltaGas Ltd., are sufficient to insulate our issuer credit rating on SEMCO from our group credit profile on AltaGas by as much as one notch. - Therefore, we are raising our long-term issuer credit rating on SEMCO to '###' from '###-' and are removing our ratings on the company from UCO. - At the same time, we are raising our issue-level rating on SEMCO's senior secured notes to 'A-' from '###+'. - The stable outlook largely reflects our expectation that SEMCO will maintain a funds from operations (FFO)-to-debt ratio of comfortably above 18% over our forecast period. We also do not expect there to be any deterioration in the overall credit quality of its parent,...

Research Update