Moody’s drops Homer City bonds to Ca

Moody's Investors Service said it downgraded Homer City Generation LP's senior secured bonds to Ca from Caa2.

The outlook remains negative.

Moody’s said the downgrade acknowledges the project's recent payment default, which occurred on Oct. 3 owing to challenging wholesale power market conditions, an unsustainable capital structure, and low liquidity.

While it understands the project has entered into a forbearance agreement with its bondholders that lasts through Oct. 17, the agency said it sees a high probability that Homer City will eventually file for bankruptcy as part of a debt restructuring.

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