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S&P cuts Talen Energy Supply
S&P said it lowered Talen Energy Supply LLC’s rating to CCC from B-, its secured debt to CCC+ from B and unsecured debt to CC from CCC. The recovery ratings on the secured and unsecured debt remain 2 (75% rounded estimate) and 6, respectively.
“Without a material improvement in EBITDA, Talen is likely to breach its senior secured financial covenant. Talen's 4.25x net senior secured debt/EBITDA covenant will be tested again when Talen files its second-quarter 2022 statements. We expect Talen's secured leverage to exceed the required covenants and lead to a potential technical default. Although Talen does not have the ability to cure under the new credit facility, we expect waivers could be negotiated, thereby creating uncertainty around the timing of a potential default,” S&P said in a press release.
The outlook is negative.
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