Moody's rates Dynegy loan Ba3

Moody's Investors Service said it assigned a Ba3 rating to Dynegy Holdings, Inc.'s new $150 million senior secured term loan.

In addition, Moody's said it has affirmed the ratings on the $3.6 billon of outstanding recourse debt of Dynegy, including its $470 million revolving and $200 million synthetic letter-of-credit facilities, which are undrawn.

The outlook is stable.

The rating and stable outlook reflect Moody's expectation of Dynegy's continued operating performance improvement as the power markets recover, the agency noted.

The company's ratings could improve through a combination of improving operational performance, consistent positive free cash flow and cash flow coverage above 10%. The ratings could experience negative pressure as a result of further deterioration in operating or financial performance relative to plan, a leveraging acquisition or further reduction in liquidity, the agency said.

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