S&P: PPL Montana to negative

Standard & Poor's said it revised the outlook to negative from stable and affirmed the BBB- rating on PPL Montana LLC's $338 million pass-through certificates due 2020.

The negative outlook reflects the company's sharply declining debt service coverage and fixed-charge coverage through 2015, the agency said.

The project also relies on indirect parental support from PPL Corp., which is increasingly important to the ratings through 2015, S&P said.

The rating reflects the company's low-cost, mine-mouth coal base-load generation and low debt per kilowatt, S&P said.

Offsetting those strengths is the expected pressure on its margins through 2015 from a combination of weakening power prices and a larger merchant exposure, the agency said.

The ratings also consider the increasingly stringent environmental regulations, S&P added, and a weak economic environment in Montana.

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