Folsom,
NJ - On October 12,
2007, Moody's Investors Service changed its rating outlook
of South Jersey Gas Company to positive from stable.
Moody’s rates SJG’s
senior secured debt as Baa1. SJG, a subsidiary of South Jersey
Industries (NYSE:SJI),
is a regulated utility providing natural gas service to over
331,000 residential, commercial and industrial customers
in the seven southernmost counties of New Jersey.
Moody’s attributed the improved outlook to the company’s
successful implementation of its newly-approved Conservation
Incentive Program during the past winter season. Implemented
in October 2006, the CIP has insulated SJG’s financial
condition against the impacts of weather and customer usage
variations.
The
rating agency elaborated on its action with the following, “In
addition, the company has maintained stronger credit metrics
than are reflected in its actual Baa rating. For the past
three fiscal years it has been consistently achieving its
allowed ROE of 10%, its EBIT/Interest coverage has been in
excess of 3.5x, its Retained Cash Flow to Debt has been in
excess of 11% and Adjusted Debt to Capitalization has been
below 50%. As the non-regulated businesses of its parent,
South Jersey Industries, continue to perform profitably,
SJG is more confident of its ability to maintain a conservative
dividend pay-out ratio in the 55% range. This lower dividend
pay-out ratio compared with its Baa peers, should allow it
to conserve earnings and build a steady capital base to support
its current annualized customer growth rate of approximately
2.1%p.a. Utility operating expenses have also been flat over
the past few years, as it has been able to control costs
through employee attrition and improved operating efficiencies.”
Moody’s continuously monitors SJG’s
corporate strategy, liquidity and ability to sustain its
credit metrics in considering any further rating actions.
South Jersey Industries (NYSE: SJI) is an energy services
holding company for South Jersey Gas, South Jersey Energy
Solutions, South Jersey Energy, South Jersey Resources Group,
South Jersey Energy Service Plus and Marina Energy. Visit
http://www.sjindustries.com for more information about SJI
and its subsidiaries.
###