Moody's eyes Parkway Generation for trim

Moody's Investors Service said it placed Parkway Generation, LLC's Ba3 senior secured credit facilities on review for downgrade. The facilities consist of a $1.075 billion term loan B due in 2029, a $140 million term loan C due in 2029, and a $100 million revolving credit facility due in 2027. Concurrent with this rating action, the outlook has been revised to ratings under review from stable.

“Today's action reflects our expectation of weak financial performance during 2023 owing to significant capacity performance (CP) penalties prompted by Parkway's fleet partial unavailability during the unprecedented winter storm that hit much of PJM's service territory from Dec. 23 to Dec. 26, 2022 (Winter Storm Elliott). Parkway's initial assessment indicates that the portfolio could be subject to approximately $100 million in CP penalties owing to forced outages or plant availability, and expects a phased repayment plan through 2023, though PJM has not communicated a final invoice to market participants’ decision yet,” Moody’s said in a statement.

Parkway plans to use its balance sheet cash and internal cash generation, which as of March 16 was about $53 million, and to tap its $100 million revolver.

“Although Parkway's current liquidity position seems sufficient to cover the expected CP payment amount, the rating action considers the impact to the project's liquidity along with the incremental burden that the payment of these obligations will have on total indebtedness and overall debt reduction,” the agency noted.

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