S&P drops Red Oak notes outlook to stable

Standard & Poor's said it revised its outlook on AES Red Oak LLC's $224 million of 8.5% and $160 million of 9.2% senior secured bonds due 2019 and 2029, respectively, to stable from positive.

At the same time, the agency said it affirmed its BB- ratings on Red Oak's senior secured bonds.

Despite improving capacity factors and falling natural gas prices, higher O&M costs and major maintenance outages in March and May 2010 prevented the strengthening in Red Oak's DSCRs, the agency said.

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