FortisTCI Ltd. S&P Rating Revised to Negative from Stable

Aug 2, 2018

Research Update: FortisTCI Ltd. Outlook Revised To Negative From
Stable On Weaker Financial Metrics; 'BBB' Rating Affirmed.


Overview:
• Following Hurricane Irma last year, FortisTCI Ltd. (FTCI) invested about
US32 million to restore its transmission and distribution network in the
Turks and Caicos Islands.
• Despite the company's recent decision to reduce its dividends, we expect
that the company's weakened financial measures could remain below our
downgrade threshold through 2020, reflecting increased debt and
regulatory lag.
• We are revising our outlook to negative from stable and affirming our
'BBB' long-term issuer credit rating on FTCI.
• The negative outlook reflects the potential for lower ratings within the
next 24 months if the company does not consistently achieve adjusted
funds from operations-to-debt of at least 15%

Rating Action:
On July 27, 2018, S&P Global Ratings revised its outlook on FortisTCI Ltd.
(FTCI) to negative from stable. At the same time, S&P Global Ratings affirmed
its 'BBB' issuer credit rating on FTCI.

Rationale:
The outlook revision reflects FTCI's weaker financial metrics following
Hurricane Irma last year, despite the company's recent decision to reduce
dividends to parent Fortis Inc. through 2020. FTCI's 2017 cash flow measures
fell after the hurricane, reflecting a 5% decline in electricity sales and
increased debt to finance storm restoration costs. The company invested about
US32 million following Irma to restore the transmission and distribution
network. Without near-term equity, we expect financial metrics will improve
only very gradually.