S&P Global Ratings publishes downgrade and revised outlook for CFC
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“We are disappointed with S & P’s decision, which is largely based on speculation about the future of Texas energy markets.” – CFC CFO J. Andrew Don
DULLES, Va., March 5, 2021 (GLOBE NEWSWIRE) – The National Rural Utilities Cooperative Finance Corporation (CFC) announced that S&P Global Ratings (S&P) has issued a downgrade of the organization’s secured and unsecured debt and its outlook to “negative “Based on the potential for increased credit stress from Texas electric utilities following last month’s winter storm that resulted in blackouts and unprecedented electricity costs across the state.
Based on CFC’s lending to rural Texas electricity cooperatives, which accounts for 15 percent of its outstanding loans, S&P downgraded the organization’s long-term issuer, senior and senior unsecured debt ratings from “A”, subordinated debt, to “A-” Rating to “BBB” from “BBB +” and short-term issuer credit and commercial paper ratings to “A-2” from “A-1”. The outlook is now negative.
“We are disappointed with S & P’s decision, which is largely based on speculation about the future of Texas energy markets,” said CFC Senior Vice President and CFO J. Andrew Don. “CFC’s financial and market performance has been strong over the years.”
S&P itself noted the strength of CFC’s underwriting and historical loss experience, and further emphasized its belief that the company has adequate funding and liquidity: “Our ratings of CFC, in our opinion, reflect its unique position in financing its rural utilities as well adequate capitalization, historically strong asset quality, adequate funding and liquidity, and access to funding from the Federal Financing Bank, Farmer Mac and subordinated bonds from members that are subordinated to all other debt instruments. “
“CFC remains strong and well capitalized,” said CFC CEO Sheldon Petersen.
He added, “The fact that electricity cooperatives continued to distribute electricity to their members despite the storm last month shows the resilience of the consumer-centric cooperative business model and its ability to provide safe, reliable and sustainable electricity.”
About CFCThe National Rural Utilities Cooperative Finance Corporation (CFC) – a not-for-profit finance cooperative with assets of more than $ 28 billion – was founded by America’s electrical cooperative network and possesses unparalleled industry expertise, flexibility, and responsiveness to our members’ needs to meet. CFC is an equal opportunity provider. Visit us online at www.nrucfc.coop.
Source: National Rural Utilities Cooperative Finance Corporation