• S&P Global Ratings raised its issuer credit rating on Big Rivers Electric Corp. (BREC), Ky., to 'BBB' from 'BBB-'.
• The outlook is stable.
• The higher rating reflects S&P's view of load growth that should contribute to revenue stability, coal fleet and carbon-intensity reductions, and favorable historical and projected financial metrics.
Three large retail electric loads are investing $50 million-$1.7 billion in new facilities for their businesses within the service territories of BREC's member cooperatives. These new and expanded facilities should translate into electricity consumption that can support a more predictable revenue stream and help shield BREC from becoming dependent on revenues from energy sales in competitive wholesale markets if non-member municipal customers do not renew existing intermediate-term contracts for purchases of BREC power.
The cooperative is reducing its carbon intensity through the recent conversion of a portion of the utility's coal generation fleet to natural gas.
The cooperative's debt service coverage was at least 1.6x in fiscal years 2020-2021 and reasonable projections indicate stronger coverage through fiscal 2025, except for fiscal 2023 when management plans to extinguish about half of a bullet maturity with cash and the balance through a refinancing.