OREANDA-NEWS. Fitch Ratings has assigned a 'BBB+' rating to Ameren Corp.'s (AEE) tranche issuances of $350 million 2.70% senior unsecured notes due Nov. 15, 2020 and $350 million 3.65% senior unsecured notes due Feb. 15, 2026. Net proceeds will be issued to repay short-term debt, consisting of commercial paper issuances.

Ameren Corp.'s (AEE) credit profile reflects the relatively stable and predictable operating cash flows of its two utility subsidiaries, Union Electric Co. (UE) and Ameren Illinois Co. (AIC), and the financial support it receives from them in the form of dividends for the payment of corporate expenses and dividends to common shareholders. The ownership of a transmission business, Ameren Transmission Co. of Illinois (ATXI), provides further uplift to AEE's financial profile.

KEY RATING DRIVERS

Pending Rate Proceedings: Fitch Ratings expects balanced rate decisions in AIC's pending electric and gas rate filings that will continue to support stable earnings and cash flows at AEE in 2016. AIC is seeking a $109 million Formula Rate Plan (FRP) electric rate increase and a $45 million gas rate increase, with the latter based on a 2016 forward test year. Favorably, AIC received constructive recommendations from administrative law judges in each respective rate proceeding. Final rate decisions for both proceedings are expected in December 2015, with new rates effective January 2016.

Rising but Manageable Capex: AEE's projected capex program is significantly higher than its historical norm over the next five years. Forecast capex ranges between $8.55 billion and
$9.25 billion over 2015 - 2019, compared with approximately $6.46 billion over the previous five years. Planned capex includes about $2.3 billion of rate-supportive FERC-regulated transmission investments, including ATXI's construction of the Illinois Rivers project. Fitch estimates ATXI's EBITDA will contribute 7% of consolidated EBITDA by 2017, up from 1% in 2014.

Fitch does not expect a reduction to the transmission ROE, as projected by management, to have a significant effect on AEE's or AIC's earnings or trigger some downward revisions to projected capex spending in the transmission business. Management estimates a 50-bps ROE reduction would reduce AEE's and AIC's annual earnings by $4 million and $2 million, respectively.

Robust Credit Metrics: Tariff increases at the utilities, continued cost control, incremental earnings stemming from transmission investments and moderate consolidated leverage should continue to support a sound credit profile, in Fitch's view. Fitch forecasts adjusted debt to EBITDAR and FFO lease-adjusted leverage to average 3.5x and 3.2x, respectively, over 2015 - 2017. FFO-based metrics include the positive effect of sizeable tax benefits stemming from AEE's prior ownership of the merchant business and previous capital investments.

Financial Flexibility: AEE plans to leverage its favorable cash flow position to support utility and ATXI investments over the next few years. Robust cash flows rely on the availability of approximately $502 million of consolidated tax benefits at Sept. 30, 2015, including approximately $409 million at AEE, which management expects to realize into 2017. It also relies on the solid financial profiles of AIC and UE, which provide steady dividend distributions to AEE and should not require any significant parent equity infusions over the forecast period, in Fitch's view.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case include:

--Flat sales growth through 2017;
--Base O&M escalated at 2% per annum;
--Balanced decisions in AIC's rate cases;
--No external equity issuances through 2017;

RATING SENSITIVITIES

Future developments that may, individually or collectively, lead to a positive rating action:

--An upgrade at the utilities could lead to positive rating actions at AEE.

Future developments that may, individually or collectively, lead to a negative rating action:

--Rating Downgrades at the utilities;
--Adjusted debt to EBITDAR at or above 3.75x and FFO leverage at or above 5.00x on a sustained basis.

LIQUIDITY

AEE has access to $1.2 billion of combined sub-borrowing limits within UE's and AIC's respective credit facilities that expire in December 2019. AEE has access to a total of $700 million of credit available under the $1 billion UE facility and
$500 million of credit available under the AIC facility. AEE had $792 million of borrowings outstanding (including $9 million of letters of credit outstanding) and $72 million of consolidated cash and cash equivalents at Sept. 30, 2015. Consolidated debt maturities are manageable, with $395 million due in 2016, $681 million in 2017, $840 million in 2018, and $581 million due in 2019.