|[December 11, 2012]
Fitch Affirms NiSource's Issuer Default Rating at 'BBB-'; Outlook Stable
NEW YORK --(Business Wire)--
Fitch Ratings has affirmed the outstanding ratings for NiSource Inc.
(NI) and its subsidiaries as fully listed at the end of this release.
The affirmations include NiSource Finance Corp. (NiSource Finance) and
NiSource Capital Markets Inc., NI's two financing subsidiaries and
Northern Indiana Public Service Co. (NIPSCO), an electric and gas
utility. The Rating Outlooks are maintained at Stable. Approximately
$7.2 billion of long-term debt is affected by the rating actions.
KEY RATING DRIVERS: NI's rating and Stable Outlook reflect the low
business risk and consistent operating performance generated by its
geographically diverse mix of regulated operations. Other considerations
include the long-term financial impact of aggressive pipeline and gas
utility system modernization programs and electric environmental capital
expenditures, with a substantial portion of recoveries expected to be
received through tracking mechanisms and relatively weak credit metrics
FORWARD EXPECTATIONS: NI's financial profile is expected to remain
consistent with its current rating though its current multi-year
infrastructure-build cycle. Fitch projects NI's 2012 debt to EBITDA to
be approximately 5.0x. Typically NI's leverage peaks at the end of the
year as a result of seasonal gas storage purchases at its gas utilities
and drops during the following months as gas costs are recovered.
Leverage ratios modestly strengthened during 2012 primarily benefiting
from new electric rates effective Dec. 27, 2011, $339 million forward
equity sale in September 2012, and the timely financial recovery under
tracking mechanisms of a significant portion of NI's capital
LIQUIDITY: NI's liquidity is expected to be adequate. NiSource Finance
has a $1.5 billion revolving credit facility that matures in May 2017.
The company also issues 'F3' rated commercial paper under a $500 CP
program that is backstopped by the revolver. The revolver has one
financial covenant which sets a maximum consolidated debt-to-cap ratio
of 70%. The revolver also includes limitations on liens and restrictions
on asset sales. At the end of the third quarter of 2012 NI had
approximately $1.439 billion in net available liquidity. NI also has a
total of $515 million of accounts receivable securitization facilities
as follows: $240 million at Columbia Gas of Ohio; $200 at NIPSCO; and
$75 million at Columbia Gas of Pennsylvania. Upcoming debt maturities at
NiSource Finance include $420 million of notes due 2013 and at NIPSCO
$68 million due 2013.
Positive: Future developments that may, individually or collectively,
lead to a positive rating action include: reduced regulatory risk with
expanded revenue tracking mechanisms and improving credit metrics
through some combination of earnings growth and/or debt reduction.
Negative: Future developments that may, individually or collectively,
lead to a negative rating action include: unfavorable regulatory
decisions and higher than anticipated leverage which could resut should
NI not issue adequate equity to help fund its significant capital
program. Debt to EBITDA above 5.5x on a sustained basis would be a
catalyst for a negative rating action.
The following ratings have been affirmed with a Stable Outlook:
--Issuer Default Rating (IDR) at 'BBB-'.
NiSource Finance Corp.
--IDR at 'BBB-';
--Senior unsecured 'BBB-'
--Short term IDR 'F3';
--Commercial paper 'F3.
NiSource Capital Markets
--Senior unsecured 'BBB-'.
Northern Indiana Public Service Co.
--Senior unsecured and revenue bonds 'BBB'.
Additional information is available at 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer, and
therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Corporate Rating Methodology' (Aug. 8, 2012);
--'2013 Outlook: Natural Gas Pipelines and MLPs' (Nov. 30, 2012);
--'Pipelines, Midstream, and MLP Stats Quarterly - Second Quarter 2012'
(Sept. 27, 2012);
--'Marcellus Shale Report: Midstream and Pipeline Sector Challenges and
Opportunities' (June 10, 2012);
--'Top Ten Questions Asked by Pipeline, Midstream, and MLP Investors'
(May 1, 2012);
--'Natural Gas Pipelines: Hot Topics' (Oct. 13, 2011).
Applicable Criteria and Related Research:
Corporate Rating Methodology
2013 Outlook: Natural Gas Pipelines & MLPs
Pipelines, Midstream, and MLP Stats Quarterly -- Second-Quarter 2012
Marcellus Shale Report: Midstream and Pipeline Sector --
Top Ten Questions Asked by Pipeline, Midstream and MLP Investors
Natural Gas Pipelines: Hot Topics -- Long-Term Trends Affecting Pipeline
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
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