Moody's cuts Homer City

Moody's Investors Service said it downgraded Homer City Funding LLC's pass through bonds to Ba3 from Ba2.

The outlook remains negative.

The action reflects an expectation that Homer City's senior rent coverage ratios will likely drop 1.75x to 1.90x over the next two years compared to recent strong financial performance, Moody's said.

While the benefits of higher energy prices or energy hedges masked the deteriorating operating performance, continuation of weak operating performance in the face of much weaker energy margins could result in lower coverage ratios than current expectations, the agency said.

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