S&P cuts PPL Energy, ups RJS, rates Talen loan BB+

Standard & Poor's said it lowered its issuer credit rating on PPL Energy Supply LLC to BB- from BB upon the upcoming close of the announced merger with RJS Power Holdings LLC and removed it from CreditWatch, where it was placed with negative implications on June 11, 2014.

PPL Energy will be referred to as Talen Energy Supply LLC after June 1, 2015.

The outlook is stable.

The agency also said it rated Talen Energy’s proposed $1.85 billion senior secured facility BB+. The recovery rating is 1, indicating an expectation for significant recovery (90% to 100%) in the event of default.

In addition, S&P raised the issuer credit rating on RJS Power to BB- from B+ to reflect the transaction, and the outlook is stable. The rating on RJS' unsecured debt is unchanged at BB-; the recovery rating was revised to 3 from 2.

"Based on the current portfolio assets, we expect the enterprise to maintain adjusted debt to EBITDA of around 3.3x to 3.6x during 2015 and 2016, reflecting our assumption that gas-fired generation will continue to be relatively advantaged based on low Henry Hub prices and increasing environmental regulation," S&P credit analyst Michael Ferguson said in a news release.

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