S&P lowers Race Point loan

Standard & Poor's said it assigned a B+ corporate credit rating to the four Race Point Power co-borrowers comprised of Race Point Power II LLC, Race Point Power III LLC, Race Point Power IV LLC and NeoElectra Lux Sarl).

The agency also lowered the rating to B+ from BB on the co-borrowers' $275 million seven-year senior secured term loan.

The agency also revised the recovery rating on the loan to 3 from 1.

The recovery rating of 3 indicates 50% to 70% expected default recovery.

The outlook is negative.

The ratings reflect the company's regulatory risk and concentration in Spanish power plants, a limited ability to absorb further revenue taxes or a tariff reduction on Spanish assets, poor performance from some of the U.S assets and the effects of double leverage on the portfolio overall, said Tony Bettinelli, an S&P analyst.

The negative outlook reflects the regulatory uncertainty regarding persistent tariff deficits in Spain and the possibility that project revenue could be further reduced by future legislation in Spain, Bettinelli added.

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