OREANDA-NEWS. S&P Global Ratings today assigned its 'BBB-' issue rating to Dayton Power & Light Co.'s announced offering of $445 million senior secured notes and placed the rating on CreditWatch with negative implications. The recovery rating on this debt is '1', indicating expectations of very high (90%-100%) recovery in a payment default.

Our 'BB' issuer credit rating on Dayton Power & Light Co. and its parent, DPL Inc., remain on CreditWatch, where we placed them with negative implications on June 27, 2016.

The 'BBB-' issue rating for DP&L's proposed $445 million of senior secured note offering and '1' recovery rating indicates expectations of very high (90%-100%) recovery, reflecting collateral coverage of about 144% based on the value of the regulated assets.

The CreditWatch listing on the issuer credit ratings is based on the Ohio Supreme Court's opinion that reverses the Public Utilities Commission of Ohio's (PUCO) approval of DP&L's non-bypassable SSR. Under the current SSR, the company was permitted to collect about $110 million per year from 2014 to 2016. The Ohio Supreme Court's opinion increases the likelihood of a weaker financial risk profile, reflecting weaker financial measures for DPL and DP&L that could result in a ratings downgrade.

"We will resolve the CreditWatch listing depending on the responses of the PUCO and the company to the Ohio Supreme Court's reversal," said S&P Global Ratings credit analyst Obioma Ugboaja.