Dive Brief:

• Moody's Investors Service placed the ratings of most U.S. regulated utilities and utility holding companies on review for upgrade, affecting approximately $400 billion of debt.
• "Our placement of these issuers on review considers improving regulatory trends in the U.S., including better cost recovery provisions, reduced regulatory lag, and generally fair and open relationships between utilities and regulators, " said Moody's Managing Director Larry Hess. Moody's said many U.S. regulatory jurisdictions have become more credit supportive of utilities over time and that its assessment of the regulatory environment that has been incorporated into ratings may be overly conservative.
• Upgrades will likely be limited to one notch and should be completed in 90 days, Moody's said.

Dive Insight: 

The news from Moody's is undoubtedly welcome, even as many utilities are experiencing or forecasting meager or flat load growth. The ratings agency cited the utility sector's low number of defaults, high recovery levels and generally strong financial metrics from a global perspective as providing additional corroboration that ratings should generally be higher. A higher credit rating would allow a utility to borrow money for capital improvements on more favorable terms.