S&P rates Vistra Operations notes BBB-

S&P said it assigned a BBB- rating and 1 recovery rating to Vistra Operations Co. LLC's proposed $1 billion senior secured notes due in 2024 and 2029.

The 1 recovery rating indicates 90% to 100% expected default recovery.

Final tenor and amount of the issuance could change based on market conditions and result in a combination of five-, eight- and 10-year maturities, S&P said.

The proceeds will be used to prepay the mandatory amortization of its three term loan tranches and apply the remainder to retire a commensurate amount of its outstanding term loans B-1 and B-2, which mature in 2023, the agency said.

While the company expects to have a net debt-to-adjusted EBITDA ratio of about 3x by year-end 2019 and is targeting a net debt-to-EBITDA ratio of about 2.5x by year-end 2020, S&P said it also imputes more than $1.1 billion of debt pertaining to its unfunded pensions, operating leases and asset retirement obligations.

The ratings are based on a fair assessment of its business risk profile and significant assessment of the company's financial risk profile, the agency said.

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