Moody's rates Edison Mission note B1

Moody's Investors Service said it assigned a B1 (LGD4, 64%) rating to Edison Mission Energy's planned $2.7 billion senior unsecured note issue and a Baa3 (LGD1, 8%) rating to Midwest Generation, LLC's $500 million first-lien revolving credit facility due 2012.

The agency also affirmed Edison Mission's Ba3 corporate family and probability-of-default ratings, SGL-2 speculative grade liquidity rating and B1 senior unsecured notes and revised the loss-given-default assessment assigned to the notes to LGD4 (64%) from LGD5 (72%).

The outlook for these ratings is stable.

Midwest Generation, LLC's Ba2 $1.02 billion (originally $1.1 billion) senior secured pass-through certificates due 2009 and 2016 were placed under review for possible upgrade.

Proceeds from the new notes and cash on hand will be used to finance the company's successful tender offer for three series of securities and to prepay and permanently retire a $328 million secured term loan at Midwest Generation.

While the proposed refinancing will effectively move $800 million of debt previously issued by parent company Mission Energy Holding Co. to Edison Mission, Moody's expects the company's projected credit metrics to remain in line with other independent power companies whose corporate family rating is in the Ba range.

The review for possible upgrade of Midwest Generation's secured pass-through certificates considers the effect of the recapitalization, which shifts more than $1.3 billion of debt from Midwest Generation to the Edison Mission holding company level, the agency said, adding that given the relative predictability of Midwest Generation's cash flows and the substantially reduced level of funded Midwest Generation debt, the standalone credit profile of this subsidiary should improve.

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