Moody’s lowers DPL rating

Moody’s Investors Service has downgraded the senior unsecured rating of DPL Inc., the holding company of the Dayton Power & Light Co., making the cost of borrowing more expensive for the company.

Moody’s on Monday lowered the rating to Ba2 from Ba1 and the rating of DP&L to Baa3 from Baa2. Moody’s said the rating outlooks for DPL and DP&L are stable.

“The one-notch downgrades reflect a greater-than-expected decline in DPL’s key consolidated financial metrics as well as additional anticipated pressure on metrics going forward” said Moody’s Vice President Scott Solomon.

The decline in consolidated financial numbers has been driven by higher-than-anticipated customer shopping within DP&L’s service territory. Approximately 65 percent of DP&L’s retail electric volume has switched to a competitive electric retail service provider as of June 30, an amount larger than the 50 percent previously anticipated, Moody’s said.

While DPLER, an affiliated company that is one of the registered competitive providers operating in DP&L’s service territory, has acquired 63 percent of the switched load, the loss of customers and reduced margins from customer shopping have pressured DPL’s consolidated operating margins and cash flows, Moody’s said.

“Moreover, we expect DPL’s consolidated cash flow and key financial metrics to decline further from current levels,” Moody’s said.

DPL and DP&L’s ratings could be downgraded should customer shopping levels exceed our revised expectations. Moreover, signs that DPL will be unable to provide competitive generation services in an unregulated environment may also trigger negative rating action, Moody’s said.

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