S&P lifts Drax, rates notes BB+, revolver BBB+

S&P said it raised the long-term corporate credit rating on Drax Power Ltd. and its ultimate parent, Drax Group plc, to BB+ from BB.

The agency also said it assigned a BB+ long-term corporate credit rating to Drax Power's holding company, Drax Group Holdings Ltd., and subsequently withdrew the rating on Drax Group at the issuer's request.

The outlook is stable.

The agency also said it assigned a BB+ rating to the proposed senior secured notes to be issued by Drax Finco Ltd.

The recovery rating on the proposed debt is 4, indicating 35% expected default recovery.

S&P also said it assigned a BBB- rating to the proposed super senior revolving credit facility, reflecting a recovery rating of 1, indicating 95% expected default recovery.

Drax Corporate Ltd. will be the issuer of the proposed super senior revolving credit facility.

S&P also said it affirmed the BB+ rating on Drax Power's existing senior secured debt and removed it from CreditWatch, where it was placed with negative implications in December 2016.

The recovery rating on this debt is 3, indicating 65% expected default recovery.

The upgrades follow news that Drax plans to raise senior secured notes to refinance all of its existing debt and to repay the drawn £200 million of its £375 million acquisition facility.

Drax also intends to replace its existing revolving credit facility with a super senior facility, the agency noted.

As the company is raising a lower amount of debt for the recent acquisitions than initially assumed, the base-case forecasts demonstrate improved financial metrics than previously anticipated, S&P said.

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