MEAG's Project One senior, subordinates raised by Fitch

BY SourceMedia | CORPORATE | 09/12/22 05:09 PM EDT By Chip Barnett

Fitch Ratings said it raised the Municipal Electric Authority of Georgia's $311.4 million of Project One senior lien power revenue bonds to A from A-minus and $1.2 billion of Project One subordinated bonds to A-minus from BBB-plus.

Fitch also upgraded MEAG's $101.1 million of general resolution senior lien power revenue bonds to A from A-minus and $212.7 million of general resolution subordinated bonds to A-minus from BBB-plus.

Additionally, Fitch raised the ratings on MEAG's $83.9 million of combined cycle revenue bonds, Series 2012A and 2020A.

The rating outlook on all of the bonds is stable.

Fitch said the upgrade of the senior and subordinate bonds "reflects that asymmetric risk associated with nuclear construction cost uncertainty impacting certain Project One participants has lessened as Vogtle Units 3 and 4 approach their scheduled commercial operation dates in 2023.

"As the completion of Vogtle Units 3 and 4 nears, the ratings on the Project One bonds is no longer constrained by the asymmetric risk considerations, and the upgrade better aligns the project bond ratings with the credit quality of the Project One participants," Fitch said.

The same case was made for the general resolution and the combined cycle bonds.

MEAG is a public corporation created by the state to provide bulk electric power to municipally owned electric distribution systems. The authority supplies the full energy requirements of 49 systems through a series of power supply projects.

In March, Moody's Investors Service (MCO) upgraded MEAG's Plant Vogtle Units 3&4 Project J bonds to A3 from Baa1. Moody's revised its outlook to stable from positive at the higher rating.

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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