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Houston Industries Catches Moody's Eye

Fortnightly Magazine - March 15 1995

Moody's Investors Service has placed the Baa2 long-term credit rating of Houston Industries Inc. (HII), parent company of Houston Lighting & Power (HL&P), under review for possible upgrade. The main catalyst is HII's January agreement to sell its cable television assets valued at $2.24 billion in exchange for cash and securities to Time Warner Inc. Another factor is HL&P recent settlement with the city of Houston in its rate proceeding. Although it includes a $367-million annual rate reduction, Moody's says the settlement will have "minimal impact" on the utility's credit rating. The rating agency also affirmed the utility's senior secured debt rating of A2 and other debt ratings. Nevertheless, Moody's remains concerned over HHI's aggressive diversification plan for its subsidiary, HI Energy, over the next few years. The company plans to invest 20 percent of HI Energy's $600-million budget in domestic independent power projects, and the remaining 80 percent in international power development projects proposed for India, Pakistan, and Argentina. (em LG


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