Fitch rates Vistra notes BB

Fitch Ratings said it assigned a BB rating with recovery rating of RR4 rating to Vistra Operations Co. LLC's proposed $1 billion senior unsecured notes due 2027.

The agency said it rates the long-term issuer default rating of Vistra Operations and that of its parent company, Vistra Energy Corp. at BB.

The outlook is stable.

Vistra launched a concurrent tender offer to purchase in cash all of its outstanding 7 3/8% senior notes due 2022 and a significant portion of the 7 5/8% of the senior notes due 2024, both of which are part of the legacy Dynegy Inc. debt, Fitch said.

The tender offer and the associated transaction costs will be funded by the proceeds from the new notes at Vistra Operations and cash on hand, the agency said.

This transaction is part of management's continued efforts to simplify the capital structure post the acquisition of Dynegy and consolidate the debt issuance at Vistra Operations, Fitch said.

The transaction provides added benefits of reducing interest expense and extending the debt maturity profile, the agency said.

The ratings reflect the company's size and scale as the nation's largest independent power producer, along with the fuel and geographic diversity amassed through the acquisition of Dynegy, Fitch said.

The ratings also consider its strong free cash flow generation and commitment to conservatively manage its balance sheet with a goal to attain net debt-to-EBITDA of 2.5x, the agency said.

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