UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
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In the Matter of:
CERTIFICATE
CENTERPOINT ENERGY, INC. OF
1111 Louisiana NOTIFICATION
Houston, Texas 77002
(70-9895)
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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THIS IS TO CERTIFY that, in accordance with the terms and conditions of the
application-declaration, as amended, of Reliant Energy, Incorporated and
CenterPoint Energy, Inc. in the above-captioned file and the order of the
Securities and Exchange Commission with respect thereto (HCAR No. 27548 (July 5,
2002)), CenterPoint Energy, Inc. is reporting certain rating agency action as
set forth in more detail in the attached press release from Standard and Poor's
Ratings Services, incorporated herein by reference.
CENTERPOINT ENERGY, INC.
By: /s/ Rufus S. Scott
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Rufus S. Scott
Vice President and Assistant Corporate Secretary
Dated: October 15, 2002
CENTERPOINT ENERGY INC.'S SUBS' RATINGS LOWERED TO 'BBB'; PLACED ON WATCH NEG
Credit Analyst: Cheryl E. Richer, New York (1) 212-438-2084
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NEW YORK (Standard & Poor's) Oct. 11, 2002-Standard & Poor's
Ratings Services said today that it lowered the corporate
credit ratings of energy transmission company CenterPoint
Energy, Inc., (formerly Reliant Energy, Inc.) and its
subsidiaries CenterPoint Energy Houston Electric LLC and
CenterPoint Energy Resources Corp to triple-'B' from
triple-'B'-plus and placed the ratings on CreditWatch with
negative implications.
Houston, Texas-based CenterPoint Energy has total
debt outstanding of about $12 billion.
In addition to the high financing cost and fees which
will pressure already weak financial ratios, there is
a schedule of significant mandatory prepayments
beginning on Nov. 15, 2002 and extending through June
2003, which if not accomplished, would result in the
acceleration of the debt facilities at CenterPoint
Energy ($3.85 billion) and CenterPoint Energy Houston
Electric ($850 million).
"Despite the successful renegotiation of CenterPoint
Energy's bank facilities, this action reflects
Standard & Poor's concern with the terms of the new
arrangements," said credit analyst Cheryl Richer.
CenterPoint Energy has a low business risk profile,
supported by a very supportive regulatory
environment, lack of an electricity supply
function/commodity risk, and moderate to strong
growth in its service territory, mitigated by volume
volatility due to weather. CenterPoint Energy's main
risks in the near term are financial. Higher than
expected financing costs, and mandatory prepayments
with the possibility of acceleration translate into
ongoing refinancing risk until mid 2003. In addition,
debt will remain high until 2004/2005 when the Texas
generation assets are sold, and proceeds are received
from the securitization of stranded costs associated
with the generation assets.
Standard & Poor's expects that CenterPoint Energy
will recover its investment in plant costs as allowed
by Texas law, but debt leverage will be very high
until securitization of the regulatory assets is
completed. Thereafter, Standard & Poor's expects
CenterPoint Energy's financial profile to meet the
targets for the current ratings. However, refinancing
risk in the near term remains high; ratings will
remain on CreditWatch negative until the company can
reduce its reliance on banks and demonstrate access
to the capital markets.
A complete list of the ratings is available to the
RatingsDirect subscribers at www.ratingsdirect.com,
as well as on Standard & Poor's public Web site at
www.standardandpoors.com under Ratings Actions/Newly
Released Ratings.