S&P downgrades Illinois Power

S&P said it lowered the corporate credit and senior unsecured debt ratings on Illinois Power Generating Co. to D from CC following a filing for protection under Ch. 11 of the U.S. Bankruptcy code.

The recovery rating on the senior unsecured debt remains at 4, indicating less than 40% expected default recovery under the exchange plan, S&P said.

The company filed for bankruptcy protection because U.S. merchant power market prices and capacity prices in its region are not sufficient to sustain this merchant coal power generator's highly leveraged capital structure, the agency said.

The company’s bankruptcy filing has no impact on the credit assessment of its ultimate parent, Dynegy Inc., S&P noted.

The agency said it always considered Illinois Power and its parent IPH, LLC as separate from Dynegy and have not assumed any cash flow from IPH to Dynegy in the analysis.

Illinois Power shut down one unit at its Newton plant earlier this year due to poor economics, S&P explained.

It would have been very challenged to refinance its 2018 maturity of $300 million because of weak merchant power prices in southern Illinois and significant capital expenditure needs starting in 2018 for emissions compliance, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.