S&P lowers Red Oak Power

Standard & Poor's said it lowered the rating on Red Oak Power LLC's $224 million 8.54% bonds due 2019 and $160 million 9.2% bonds due 2029 to B+ from BB-.

The agency also said it removed the ratings from CreditWatch, where they were placed with negative implications in February. The recovery rating is unchanged at 2.

The outlook is negative.

S&P said it estimates the effect on total gross margins will be about $9.3 million spread over the next three years. Red Oak lost some margin in 2012 due to Hurricane Sandy.

However, the biggest effect will be felt during 2013, when the agency said it expects a lost margin of more than $6 million.

This estimated erosion is largely the loss of capacity payment revenues due to a lower unforced capacity rate, S&P said.

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