S&P: Dynegy unaffected by contract news

Standard & Poor's said Tuesday that Dynegy Inc.'s (B/negative/--) announcement regarding the termination of a tolling agreement with Virginia Electric & Power Co. will have no affect on the credit ratings of Dynegy.

The termination of the 110 megawatt contract is the fourth tolling agreement Dynegy has exited and helps to achieve a 50% reduction in these types of obligations. Also, the contract termination assists Dynegy in reducing its adjusted debt leverage since S&P calculates a debt equivalency based upon the net present value of these capacity payments, the agency said.

Furthermore, S&P said this brings Dynegy a step closer to its stated goal of exiting third-party energy trading, which is reflected in the current ratings.

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