OREANDA-NEWS. S&P Global Ratings today raised its issuer credit rating Entergy Corp. and its subsidiaries--Entergy Arkansas Inc., Entergy Louisiana LLC, Entergy Mississippi Inc., Entergy New Orleans Inc., Entergy Texas Inc., and System Energy Resources Inc.--to 'BBB+' from 'BBB'. The outlook is stable.

We also raised the rating on Entergy Corp.'s senior unsecured debt to 'BBB' from 'BBB-' and subsidiaries Entergy Louisiana LLC and System Energy Resources Inc.'s senior unsecured debt to 'BBB+' from 'BBB'. At the same time, we raised the senior secured debt ratings of Entergy Arkansas Inc., Entergy Louisiana LLC, Entergy Mississippi Inc., Entergy New Orleans Inc., Entergy Texas Inc., and System Energy Resources Inc. to 'A' from 'A-'.

We also raised the preferred stock ratings at Entergy Arkansas Inc., Entergy Corp., Entergy Louisiana LLC, Entergy Mississippi Inc., and Entergy New Orleans Inc. to 'BBB-' from 'BB+'.

"The upgrade reflects the improvement in the company's business risk profile, which we now assess at the higher end of the strong business risk profile category," said S&P Global Ratings credit analyst Gabe Grosberg. This improvement incorporates management's execution of its longer-term strategy of strengthening its management of regulatory risk while shrinking the size of its higher-risk merchant generation business. Proactively working with regulators to incorporate formula rate plans in both Arkansas and Mississippi has allowed the company to more consistently earn close to its authorized return on equity and we expect that this improvement will be sustained. As a result of the company's improving management of regulatory risk and above-average industrial growth within its service territory, its historical financial measures have remained steady despite high capital spending and weak electricity prices.

We base our rating on Entergy on our assessment of its strong business risk profile and significant financial risk profile.

The stable outlook reflects our view that the company will continue to execute on its longer-term strategy of improving its effective management of regulatory risk while shrinking the size of its higher-risk merchant generation business. We expect FFO to debt between 16%-20%.

We could lower the rating on Entergy over the next 12 to 24 months if the company's financial measures materially weaken, reflecting FFO to debt consistently below 15%. This could occur if the company's ability to effectively manage regulatory weakens, capital spending materially increases, and electricity prices continue to weaken.

Although less likely, we could raise the rating over the next 12 to 24 months if the business risk profile continues to improve and the financial measures also strengthen, reflecting FFO to debt consistently greater than 23%.