S&P: Essential Power loans BB

Standard & Poor's said it assigned its BB rating and 2 recovery rating to Essential Power LLC's $565 million senior secured term loan and $100 million senior secured first-lien revolving credit and letter of credit facility.

The 2 recovery rating indicates substantial recovery of principal in a default scenario.

At the same time, the agency said it raised its rating on the $66.3 million second-lien stub to BB from B+. The agency said it also revised the recovery rating to 6 from 3. The 6 recovery rating reflects expectation of negligible recovery if a payment default occurs.

The outlook is stable.

S&P said the stable outlook reflects expectations that relatively stable revenue streams will allow for deleveraging over the loan's tenor, to about $230 per kW by the time hedges expire in 2016. A ratings upgrade is unlikely given the limited asset diversity, the age of the assets and the project's exposure to merchant power revenue.

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