S&P lowers Frontera

S&P said it downgraded the rating on Frontera Generation Holdings LLC’s $775 million term loan and $35 million revolver to BB- from BB. The recovery rating remains 1, reflecting a rounded 90% recovery expectation under a hypothetical default.

“The downgrade reflects that Frontera was unable to sweep a considerable amount of cash in 2019 or 2020 despite our expectation that it will continue to benefit from higher energy margins than those of a typical U.S.-based merchant power generator. As of March 31, 2020, the project had about $761.5 million outstanding under its $775 million term loan B,” S&P said in a press release.

“When we affirmed our rating in October 2018 following Frontera's debt upsizing, we had expected that it would sweep more than $100 million in cash by the end of 2020,” S&P said.

The outlook is stable.

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