S&P puts Juniper Generation on positive watch

Standard & Poor's said it placed its B+ rating on Juniper Generation LLC's $105 million senior secured notes due 2012 on CreditWatch with positive implications.

The placement follows a similar rating action on Juniper's primary offtaker, Pacific Gas & Electric Co.

"Because the rating on Juniper is currently constrained by the rating on PG&E, Juniper could be upgraded along with a PG&E upgrade," said S&P credit analyst Tobias Hsieh. "However, the rating on Juniper is unlikely to rise above a high speculative-grade or low investment-grade level because of other risk factors unrelated to PG&E."

S&P said the rating on Juniper, a holding company with ownership interests in a portfolio of 10 cogeneration facilities, reflects the PG&E bankruptcy and the fact that Juniper's debt is paid after project-level debt service.

However, PG&E has affirmed the offtake contract with the projects, and the bankruptcy court has approved the affirmation. Furthermore, Juniper's current energy pricing of 5.37 cents per kWh is substantially more favorable than the projection at the time of the bond issuance.

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