Moody's lowers Colowyo Coal

Moody's Investors Service said it downgraded Colowyo Coal Funding Corp.'s senior secured regular bond/debenture to B1 from Ba3.

The outlook is stable

The action reflects Colowyo's large asset impairment charge in 2009 and Rio Tinto's intent on closing Colowyo in 2018 after expiration of the long-term contracts, according to the agency.

The B1 rating is supported by a debt service reserve equal to about 10 months of debt service, offtake agreement with Craig Station's owners and Rio Tinto's contractual obligations, the agency said.

The rating also considers expectation that any draws on the debt service reserve is unlikely to be replenished and the existence of broad force majeure provisions under the offtake agreements, Moody's said.

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