S&P rates CPV Maryland loan BB-

S&P said it preliminarily rated CPV Maryland LLC’s planned $375 million term loan BB- with a 2 recovery rating.

CPV Maryland will use the proceeds to refinance its debt used to fund the construction and initial operations of the project, as well as pay swap termination costs, if any, transaction-related expenses and a one-time distribution payment to its sponsors.

CPV’s sole asset is the St. Charles Energy Center, an operating 745-megawatts natural gas-fired combined cycle gas turbine facility in Charles County, Maryland.

“The project's operating risk profile is typical of a fully merchant, single-asset, and modern CCGT, that generates cash flow through its life via energy sales, participation in the capacity markets, and ancillary services. Based on our view of industry factors and market-driven variables, such as power demand, clean energy transition, emission control regulations, and pace and magnitude of retirement of uneconomical units, as well as commodity and capacity pricing, we forecast a minimum debt service coverage ratio (DSCR) of 1.52x and an average DSCR of 1.66x for CPV Maryland (including the post-refinancing period),” S&P said in a press release.

The outlook is stable. The outlook reflects an expectation the project will continue operating in line with its historical performance and generate DSCRs primarily in the 1.8x-2.1x range throughout the loan’s term.

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