TEXT-S&P on Connecticut Water Service Inc, Connecticut Water Co

(The following statement was released by the ratings agency)

Aug 26 - Standard & Poor's Ratings Services raised the senior unsecured rating on water utility Connecticut Water Service Inc (CTWS.O). to 'A' from 'A-'. At the same time, we affirmed our 'A' corporate credit rating on the company and its largest utility subsidiary, Connecticut Water Co. (CWC). The outlook is stable.

The affirmation of the corporate credit rating follows our annual review of the company and incorporates our expectation of adequate and timely rate relief and maintenance of the current financial risk profile, which is appropriate for the rating. The upgrade reflects Standard & Poor's notching criteria, which requires senior unsecured debt to be rated at the corporate credit rating if priority debt is less than 20% of assets. Connecticut Water Service has less than $1 million of secured debt and other priority obligations and total assets of $374 million.

The stable outlook reflects improving regulation and timely rate relief in Connecticut. Unfavorable shifts in regulation, or significant delays in rate relief and rate case approvals at substantially lower levels than requested could lead to FFO to debt of about 12% and leverage to increase to the upper 50% area and a negative outlook. We could change the outlook to positive if the Connecticut Department of Public Utility Control authorizes sufficient rate increases and returns on equity to allow the company to consistently achieve FFO to debt of about 18% with leverage at around the current 50%.