The rating agency bumped CMS's long-term ratings up one notch to "Baaa3" from "Ba1", moving it into investment grade territory. The rating outlook is stable.
Moody's Vice President Scott Solomon said that while the Jackson, Mich.-based company's debt level remains significant, a favorable regulatory environment has allowed the utility to increase its infrastructure investment while producing consistent financial results. Legislation passed in 2008 in Michigan streamlined the process for rating cases.
Moody's said the upgrade reflects the company's strong recent financial performance.
The agency said that CMS' rating is constrained at its current level by the high debt level, an estimated $2.4 billion.
The company's stock rose 9 cents to $27.44. It is up 12.6 percent for 2013.