S&P might cut Talen Energy unsecured debt

S&P said it placed the issue-level rating on Talen Energy Supply LLC's guaranteed unsecured debt on CreditWatch with negative implications.

The CreditWatch placement follows Talen Energy's announcement that it is seeking project financing for two of its gas-fired generating assets, Lower Mount Bethel and Martin's Creek, the agency said.

All other issuer and issue-level ratings are unchanged.

“In our view, the expected refinancing plan, which includes the $450 million project financing and tender offer of $400 million of outstanding debt, as well as anticipated operational improvements, appears credible and would bring the portfolio in line with market expectations, stabilize the balance sheet and partially protect the issuer against refinancing risk,” S&P said in a news release.

“The plan would also increase senior secured leverage and negative cash flow during 2020 when a weaker capacity market is likely to cause lower EBITDA.”

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