Moody's turns Talen view to negative

Moody's Investors Service said it changed Talen Energy Supply, LLC's outlook to negative from stable and downgraded its speculative grade liquidity rating to SGL-3 from SGL-2.

“The negative outlook reflects our view that Talen's financial profile could decline over the next 12 to 18 months driven by low energy margin, weaker than expected PJM auction results for the 2022/2023 period, and uncertainty over future auction results and capacity revenue. As a result, the company's CFO pre-WC to debt ratio could remain below 5% on a sustained basis absent material additional deleveraging or other operational enhancements,” the agency said in a press release.

The speculative grade liquidity rating downgrade reflects a still solid liquidity position but one that has been hurt by the February Texas weather event and low-energy margins and capacity revenue given the recent PJM auction results, Moody’s said.

Moody's affirmed Talen's ratings, including its corporate family rating at B2, its probability of default rating at B2-PD, its senior secured debt at Ba3 and its B3 senior unsecured guaranteed debt.

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