Moody's may boost AES Red Oak

Moody's Investors Service said it placed the B2 rating of the senior secured bonds of AES Red Oak, LLC under review for possible upgrade.

The review of Red Oak's rating was prompted by the review for upgrade of The Williams Cos., Inc. (senior unsecured B1), which guarantees the payments of its subsidiary, Williams Energy Marketing & Trading Co., under a long-term tolling agreement that expires in 2022, the agency said.

However, current expectations for operating performance and cash flow coverages for the project are likely to constrain its rating to the B1 level regardless of the level of William's rating, the agency said, noting that this reflects Moody's expectations that the project will continue to have a relatively low dispatch rate in 2006 due to weak market conditions for gas fired power plants and that cash flow coverage of debt service will be 1 times in 2006.

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