S&P rates Homer City notes B+

Standard & Poor's said it assigned a B- corporate credit rating to Homer City Generation LP, along with a B+ rating to its $174 million senior secured notes due 2019 and $465.9 million senior secured notes due in 2026.

The issues also were assigned a 1 recovery score.

The outlook is stable.

The agency said it rates Homer City using the corporate-rating criteria and not the project-finance criteria because there is no cash-management structure characteristic of project finance.

The ratings reflect its weak business profile and highly leveraged financial profile, S&P said.

The weak business profile reflects Homer City's small scale, weak competitive position, no geographic diversity and little operational diversity with three plant units, the agency said.

The company also is exposed to volatility of output market electricity prices and input fuel costs, but S&P added that it expects about 20% of cash flow to come from PJM Interconnection capacity markets, which have fixed pricing through mid-2017.

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