Fitch Ratings downgraded the debt of TXU’s parent company, Energy Future Holdings Co. (TXU), from CCC to CC, which “implies very high levels of credit risk such that default of some kind appears probable at some point in the future,” the company said in a statement. Fitch cut its unregulated subsidiaries to eight levels below junk and said a default appears probable.
Energy Future Holdings was taken private in 2007 in the largest buyout in history.
Energy Future Holdings’ electricity retail unit, TXU Energy, also has had “significant” customer losses and increased competition may pressure profit margins at the unit, Fitch said.
The “current highly leveraged capital structure” at Energy Future Holdings’ unregulated unit “is no longer sustainable and some kind of default seems inevitable,”according to the report.