S&P cuts Elwood notes

S&P said it lowered its rating for Elwood Energy LLC’s senior secured notes to BB- from BB. The recovery rating remains 1, indicating very high (90%-100%; rounded estimate: 95%) recovery in default.

“S&P Global Ratings anticipates the project's cash flow will deteriorate due to the low cleared capacity price for 2023/2024 of $34.13 per megawatt (MW)/day in the Pennsylvania-Jersey-Maryland Interconnection (PJM) Commonwealth Edison Co. (ComEd) zone. We now project debt service coverage ratios (DSCR) could fall below 1x in 2023 and 2025,” the agency said in a press release.

“Historically, capacity prices in that service area cleared at about $180 to $200 per MW-day, which had resulted in robust credit metrics, including debt service coverage ratios above 2x,” S&P added.

The agency, however, said it sees Elwood having enough cash on its balance sheet to cover any shortfalls in payments.

The negative outlook.

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