Providenciales, Turks and Caicos Islands (Thursday, August 2, 2018) – Global independent credit rating agency Standard & Poor’s (S&P) announced on Friday, July 27, 2018, that it is maintaining a ‘BBB’ global corporate rating for FortisTCI Limited (the “Company”). However, the agency said, “We are revising our outlook to negative from stable on weaker financial metrics following Hurricane Irma last year.”
S&P reported in their rationale that, “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 response to Hurricanes Irma and Maria in 2017, which resulted in a restoration cost of $32 million due to damages to the transmission and distribution network across all islands, weakened the Company’s financial position. Financial improvements will only happen over time and assuming the Company meets the financial metrics based on assumptions established in S&P’s base case scenario.
These assumptions are: a return to pre-storm electricity sales in 2018, electricity sales growth of 2% to 3% annually, a rate increase of 6% in 2019 to recover hurricane costs, timely recovery of fuel costs from customers, average annual capital spending of $30 million in 2018, and no common stock dividend payments until 2020.”
Having a ‘BBB’ Corporate Credit Rating provides for more favourable financing terms, and enabled FortisTCI to access the private debt market in the United States in 2015 and 2016. It was also because of the Company’s financial strength and stable outlook that FortisTCI was able to access the local debt market, closing on a $5M bond with the Turks and Caicos Islands National Insurance Board in 2016, providing a credit grade investment opportunity for the pensions of the people of this country. Maintaining an investment-grade credit rating is critical to the Company’s business model.
FortisTCI President and CEO Eddinton Powell said, “Considering the current business environment, we are pleased to have maintained our credit rating during this recent S&P review. We know that the Company must regain its financial footing to avoid a further downgrade and we are committed to restoring our financial health.”
Mr. Powell added, “FortisTCI operates in a highly capital intensive environment and must have access to the competitive capital markets locally and abroad. This access allows the Company to obtain the necessary funding for major investments in energy infrastructure that serve the people of Turks and Caicos Islands, and give the Company the ability to respond to disasters as we did last year following Hurricanes Irma and Maria.”
FortisTCI has filed a rate variation application, which if approved, will aid the Company in restoring its financial strength. A copy of the full S&P Global report is available on the FortisTCI website at www.fortistci.com/news