S&P cuts CE Generation bonds

Standard & Poor's said it lowered its rating to B- from BB on CE Generation LLC's $400 million senior secured notes due 2018 and revised the recovery rating to 2 from 1 on the notes.

The outlook is negative.

"The rating action reflects our anticipation of substantial deterioration in cash distributions received and holding company debt service coverage at CE Gen," said S&P credit analyst Tony Bettinelli in a news release.

The negative outlook reflects S&P's anticipation that CE Gen will have insufficient funds in 2014 and 2015 to service debt as a result of a distribution lockup at its primary operating unit, Salton Sea Funding Corp., and will thus have to rely on parental support, the agency said.

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