Wall Street's reaction to the Duke Energy merger minus intended CEO Bill Johnson has been swift.
Standard & Poor's Financial Services has placed Duke's A- corporate credit ratings on its CreditWatch with negative implications "in response to abrupt change in executive leadership."
Hours after the $32 billion merger closed Monday, Duke stunned employees, regulators and analysts by announcing that CEO Jim Rogers would stay on as president, chief executive and chairman. Johnson had been set to become chief executive since the merger was announced in January 2011.
"The sudden shift in management raises concerns about effective corporate governance, successful handling of the anticipated merger integration, and the ongoing effective management of pending challenges that face the combined entity," said S&P credit analyst Dimitri Nikas.
Credit ratings are critical to utilities, which depend on capital markets to finance power plants and other infrastructure projects that can cost billions of dollars. Including Progress projects, Duke has about $5 billion in new power plants under construction.
S&P said it was also revising its CreditWatch implications on Progress Energy's BBB+ credit rating from positive to developing. The change includes Progress subsidiary Progress Energy Carolinas, which will continue to operate under Duke's ownership.
Standard & Poor said it would resolve the credit watch listing "in the near term" after more assessment of the implications of the leadership change.