APS 2013 Annual Report Download - page 70

Table of Contents
subject to the covenants and could “cross-default” other debt. See further discussion of “cross-default” provisions below.
Neither Pinnacle West’s nor APS’s financing agreements contain “rating triggers” that would result in an acceleration of the required interest and
principal payments in the event of a rating downgrade. However, our bank credit agreements contain a pricing grid in which the interest rates we pay for
borrowings thereunder are determined by our current credit ratings.
All of Pinnacle West’s loan agreements contain “cross-default” provisions that would result in defaults and the potential acceleration of payment
under these loan agreements if Pinnacle West or APS were to default under certain other material agreements. All of APS’s bank agreements contain “cross-
default” provisions that would result in defaults and the potential acceleration of payment under these bank agreements if APS were to default under certain
other material agreements. Pinnacle West and APS do not have a material adverse change restriction for credit facility borrowings.
See Note 6 for further discussions of liquidity matters.
Credit Ratings
The ratings of securities of Pinnacle West and APS as of February 14, 2014 are shown below. We are disclosing these credit ratings to enhance
understanding of our cost of short-term and long-term capital and our ability to access the markets for liquidity and long-term debt. The ratings reflect the
respective views of the rating agencies, from which an explanation of the significance of their ratings may be obtained. There is no assurance that these ratings
will continue for any given period of time. The ratings may be revised or withdrawn entirely by the rating agencies if, in their respective judgments,
circumstances so warrant. Any downward revision or withdrawal may adversely affect the market price of Pinnacle West’s or APS’s securities and/or result
in an increase in the cost of, or limit access to, capital. Such revisions may also result in substantial additional cash or other collateral requirements related to
certain derivative instruments, insurance policies, natural gas transportation, fuel supply, and other energy-related contracts. At this time, we believe we have
sufficient available liquidity resources to respond to a downward revision to our credit ratings.
Moody’s Standard & Poor’s Fitch
Pinnacle West
Corporate credit rating Baa1 A- BBB+
Commercial paper P-2 A-2 F2
Outlook Stable Stable Stable
APS
Corporate credit rating A3 A- BBB+
Senior unsecured A3 A- A-
Secured lease obligation bonds A3 A- A-
Commercial paper P-2 A-2 F2
Outlook Stable Stable Stable
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