The ratings on Duke Energy Corp. and its major subsidiary, Duke Capital LLC, are on CreditWatch with negative implications, following the company's announcement that is acquiring Cinergy Corp. in an all-stock transaction. The CreditWatch listing reflects primarily the uncertainty surrounding a number of events that may transpire as a result of the merger. These events include the potential separation of the electric and gas transmission and distribution (T&D) assets, which would remove a major source of stable cash flow, lack of clarity on a final legal structure to determine where debt will reside, the challenge to keep the necessary cost savings, and the potential for nonregulated activities to become more profitable and thus grow in size. The ratings on Duke
