Moody's may raise Cleco Evangeline bonds

Moody's Investors Service said it placed Cleco Evangeline, LLC's Ba2 senior secured bonds under review for possible upgrade following the announcement by Williams Cos., Inc. (Ba2/under review for upgrade) that it has entered into a definitive agreement to sell substantially all of its power assets and full service power supply contracts to Bear Energy LP, a unit of the Bear Stearns Cos.

The agency said that fundamental to Cleco Evangeline's rating is the long-term tolling agreement between the company and Williams that expires in 2020, as this tolling agreement is the principal source of cash flow for the Cleco Evangeline project. Given the good historical operating performance of the plant with availability levels above 95%, Moody's said it anticipates that Cleco Evangeline will be able to continue to achieve required availability levels and receive associated capacity payments.

The review will focus on the assumption of the project's tolling arrangement by Bear Energy, an evaluation of the guarantee structure and an assessment of the new owner's operating and dispatch plan for the Cleco Evangeline plant, the agency said.

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