Moody's drops Ameren Genco to junk

Moody's Investors Service said it downgraded the senior rating of Ameren Energy Generating Co. to Ba1 from Baa3.

The outlook is negative. This action concludes the review for downgrade. Moody's affirmed the Ameren Corp.'s Baa3 senior rating with a stable outlook.

"The downgrade of Ameren Genco's ratings reflects declining cash flow coverage metrics that are not expected to remain above Moody's investment grade rating parameters, continued low power prices that are weighing heavily on margins, and the company's vulnerability to higher environmental spending requirements," Michael G. Haggarty, a senior vice president, said in a statement.

The Ba1 rating is better reflective of the risks associated with this relatively small, predominantly coal fired, unregulated generating company selling power mostly in the MISO power market, the agency noted.

The downgrade also reflects the view that the Ameren parent company has limited flexibility to support its merchant generating business given ongoing regulatory uncertainties at both its Missouri and Illinois regulated utility businesses, Moody's added.

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