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Allegheny's rating is lowered by service

Moody's Investors Service, which downgraded the utility'srating to "junk" status on Oct. 1, lowered it again Wednesday.

Moody's Investors Service, which downgraded the utility'srating to "junk" status on Oct. 1, lowered it again Wednesday.

November 08, 2002|by JULIE E. GREENE

Moody's Investors Service has further downgraded Allegheny Energy's investment rating.

The rating agency lowered the utility's debt rating to "junk" status on Oct. 1.

The agency lowered the rating further on Wednesday from Ba1 to B1 for senior unsecured debt.

The agency also lowered the rating for Allegheny's energy trading subsidiary, Allegheny Energy Supply, from Ba2 to B1.

Bond or stocks with a Moody's "B" rating "generally lack characteristics of the desirable investment."

A "Ba" rating meant the stock or bond had "speculative elements" and their future is not "well-assured."

Allegheny Energy spokesman Scott Shields said Thursday that the downgrade wasn't unexpected given recent events.

In lowering the ratings, Moody's cited "uncertainties regarding the delay in filing the company's financial statements."

On Monday, Allegheny Energy announced it would delay release of its third quarter earnings report after finding errors in its financial statements.

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Moody's also noted the utility's limited financial flexibility and potential default under its credit agreements requiring ongoing waivers or cures.

"We're working with our lenders to increase financial flexibility and correct what we perceive to be a short-term cash flow problem," Shields said. "We have enough cash to operate the business."

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