S&P: AES Red Oak stable

Standard & Poor's said it changed its outlook on AES Red Oak LLC's $384 million senior secured bonds (currently approximately $374.6 million outstanding) to stable from negative following the change of outlook by S&P on the ratings of The Williams Cos. (B+/stable/--) to stable from negative.

AES Red Oak is a combined-cycle, natural gas-fired generating station located in Middlesex County, N.J., with a plate capacity of 830 megawatts. AES Red Oak is 100% indirectly owned by The AES Corp. (B+/stable/--). The project currently has a 20-year power purchase agreement with Williams Power Co. Inc. (formerly known as Williams Energy Trading and Marketing Co).

S&P said the B+ rating on AES Red Oak's senior secured bonds reflects The Williams Cos.' credit risk and S&P's view of the plant's market price risk under a merchant scenario analysis. S&P concluded that, with revised market price assumptions given the prolonged depression in electricity markets, the project would not be able to meet debt service requirements under a pure merchant scenario in current market conditions.

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