Fitch Rates Entergy Louisiana First Mortgage Bonds, ‘BBB+’

Fitch Rates Entergy Louisiana First Mortgage Bonds, ‘BBB+’

Business Editors


Fitch Ratings has assigned a ‘BBB+’ rating to Entergy Louisiana, Inc.’s (ELI) $100 million issuance of 5.50% series first mortgage bonds due April 1, 2019. Proceeds from the issuance will be used to repay short-term debt and for other general corporate purposes.

ELI’s ratings reflect the integrated utility’s solid financial profile, reasonable regulatory environment, and nuclear operating risk. In addition, ELI’s ratings are linked to that of the other regulated Entergy subsidiaries through the interrelationships created by the system operating agreements and shared liquidity through participation in the Entergy System Money Pool. The system agreements allow for coordinated resource planning and operation of generating assets and cost allocation among the affiliated utilities. Nuclear risk includes both ELI’s ownership of the Waterford 3 nuclear unit as well as its share of the capacity and energy of Grand Gulf Electric Generating Station through the system agreements. Electric industry restructuring is not expected in the near term in Louisiana.

ELI’s financial measures are strong for the rating category with earnings before interest, taxes, depreciation and amortization (EBITDA) interest coverage of nearly 6.5 times (x) and total debt-to-EBITDA of just over 2x for the year ended December 31, 2003. In January 2004, ELI signed an agreement to acquire the 718MW Perryville plant from a subsidiary of Cleco for $170 million. This purchase was the result of a request for proposals initiated in 2002 to meet to new capacity needs. While ELI will own 100% of the plant, it will sell 75% of the output to Entergy Gulf States, Inc. under a long term cost of service contract. The acquisition is expected to be financed with debt at ELI, although it is contingent on the receipt of all necessary final regulatory approvals, including approval of full cost recovery.

ELI, a wholly owned subsidiary of Entergy Corp., is a vertically integrated electric utility serving approximately 649,000 customers in Louisiana.

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