Fitch puts Reliant Energy on positive watch

Fitch Ratings said it placed Reliant Energy, Inc.'s B issuer default, BB-/RR2 senior secured debt and B/RR4 senior subordinated debt ratings on Rating Watch positive following a number of recent developments that the agency believes will materially improve Reliant's credit profile.

Most significantly, the commencement of operations under, and the continued realization of financial benefits from, the implementation of a credit enhancement structure through Merrill Lynch for the retail business has significantly reduced liquidity needs and permitted the redeployment of cash to debt reduction, Fitch said. Also, Reliant tendered for its $275 million convertible subordinated debentures in November and the offer has been 99% subscribed, resulting in the issuance of common shares plus a modest cash outlay.

In addition, the agency said it will likely revise its recovery rating analysis as part of its wholesale market pricing update, which may result in more robust valuations for Reliant's competitive power generating fleet.

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