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Moody’s downgrades GenOn, certificates
Moody's Investors Service said it downgraded GenOn Energy, Inc.'s corporate family rating to Caa3 from Caa2 and probability of default rating and Caa3-PD from Caa2-PD.
At the same time, the agency downgraded the ratings of GenOn REMA, LLC and GenOn Mid-Atlantic, LLC’s (GenMA) pass-through certificates to Caa1 from B2.
The outlook remains negative.
"The rating downgrade reflects an increasing likelihood of a GenOn default, possibly as soon as June 2017," Moody’s vice president, senior credit officer Toby Shea said in a news release.
“A default at GenOn creates contagion risk for REMA and GenMA, but we see good recovery values at those entities."
GenOn's Caa3 corporate family rating largely reflects its high debt burden relative to cash flow and the relatively high risk of default, the agency said. The default risk at GenOn is exacerbated by dividend restrictions at its GenMA and REMA subsidiaries.
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