Moody's lifts Reliant Energy to SGL-2

Moody's Investors Service said it changed Reliant Energy Inc.'s speculative grade liquidity rating to SGL-2 from SGL-3.

The outlook is stable.

The SGL-2 rating reflects the agency's view that the company's liquidity profile has improved, is good and will remain reasonably stable over the next 12 months as a result of several recently completed transactions, including a credit hedging sleeve with Merrill Lynch for the retail electric provider operations, and an expectation for reduced debt associated with a pending asset sales program, which could lower debt service obligations.

In addition, Reliant's 2006 tender and conversion of its convertible securities into equity and its continuing asset optimization plans should provide additional relief to its financial covenants and possibly generate incremental asset sales proceeds that could be viewed as positive developments for the liquidity profile, Moody's said.

Reliant refinanced its parent company credit facilities and completed its retail credit structure with Merrill Lynch at the end of 2006. As a result, the company now has a $700 million revolver due 2009, a $300 million special letter-of-credit facility due 2010 and a $300 million working capital facility due 2012.

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