Moody’s lowers Illinois Power, debt to Ca

Moody's Investors Service said it downgraded the corporate family rating, probability of default rating and senior unsecured rating of Illinois Power Generating Co. (Genco) to Ca from Caa3.

The speculative grade liquidity rating was affirmed at SGL-4.

The outlook is negative.

The downgrade was prompted by Genco parent company Dynegy Inc.'s (B2, stable) announcement that it reached a tentative agreement with some Genco bondholders to restructure Genco's debt.

"The proposed exchange offer would result in Genco lenders receiving about 40 cents on the dollar, which we view as a distressed exchange," Moody’s senior vice president Swami Venkataraman said in a news release.

"If the exchange is successful, the substantially lower debt burden would allow the 4.2 GW generating portfolio at Genco and affiliate Illinois Power Resources Generating (unrated) to be cash flow positive."

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