FirstEnergy Solutions downgraded on bankruptcy expectation, FE parent seen as stable

Standard & Poor’s has downgraded the bond rating of FirstEnergy Solutions, the unregulated subsidiary of FirstEnergy Corp., because it believes the company will file for bankruptcy protection before 2018. S&P’s in the same week raised its outlook for parent company FirstEnergy because it believes the corporation will sell off or somehow move its power plants into a regulated company (Credit: Plain Dealer file photo).

CLEVELAND — “Standard & Poor’s has further lowered its ratings for bonds sold by FirstEnergy Solutions because it believes the company’s negotiations with creditors is a first step toward its seeking bankruptcy protection.

At the same time, S&P has revised its outlook for parent company FirstEnergy Corp. from negative to stable on the expectation that the corporation will be able to cover the bankruptcy costs as it sells off FirstEnergy Solutions or somehow is able to move it under the protection of a regulated company where the risk is minimal and growing profits certain.

…FirstEnergy Solutions has been closing or selling older coal-fired plants rather than upgrade their pollution equipment. But the surviving coal plants, along with the company’s four nuclear reactors, are having trouble competing with the gas turbine plants while wind and solar farms disrupt their traditional practice of running flat out 24 hours a day.”

— John Funk, Cleveland Plain Dealer

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