Research Update: Southern California Gas Co. Ratings Affirmed; Stand-Alone Credit Profile Revised To 'a+'; Outlook Remains Negative

We expect U.S.-based Southern California Gas Co.'s (SoCalGas) stand-alone financial measures to modestly weaken to the middle of the range for its financial risk profile category, reflecting robust capital spending, tax reform, and expectations for marginally higher dividends. We are affirming our ratings on SoCalGas, including our 'A' issuer credit rating, 'A-1' short-term credit rating, 'A' rating on its senior unsecured debt, 'BBB+' rating on its preferred stock, and 'A+' rating on its first-mortgage bonds. At the same time, we are revising SoCalGas' stand-alone credit profile (SACP) to 'a+' from 'aa-' and revising our comparable ratings analysis modifier to neutral from positive. The negative outlook on SoCalGas reflects the negative outlook on its parent Sempra, which incorporates our view that

...+ We expect U.S.-based Southern California Gas Co.'s (SoCalGas) stand-alone financial measures to modestly weaken to the middle of the range for its financial risk profile category, reflecting robust capital spending, tax reform, and expectations for marginally higher dividends. + We are affirming our ratings on SoCalGas, including our 'A' issuer credit rating, 'A-1' short-term credit rating, 'A' rating on its senior unsecured debt, '###+' rating on its preferred stock, and 'A+' rating on its first-mortgage bonds. + At the same time, we are revising SoCalGas' stand-alone credit profile (SACP) to 'a+' from '##-' and revising our comparable ratings analysis modifier to neutral from positive. + The negative outlook on SoCalGas reflects the negative outlook on its parent Sempra, which incorporates our view that SB 901 is a shorter-term measure and that further longer-term reform is necessary in California to preserve the state's electric utilities' credit quality. This includes reform to the...

Research Update