S&P cuts Midland Cogeneration notes

S&P said it downgraded Midland Cogeneration Venture LP’s $560 million of ($294.5 million outstanding) senior secured notes and $181.25 million ($100.2 million outstanding) of series B senior secured notes due 2025 to BB from BB+.

The 1 recovery rating on the project's debt indicates S&P’s expectation of very high (90%-100%; rounded estimate: 95%) recovery in the event of a default.

The downgrade follows Midland’s settlement with its revenue counterparty, which cuts fixed-energy rate below S&P’s previous forecast, the agency said.

“As a result, lower forecasted cash flows pushes our minimum debt service coverage ratio (DSCR) to 1.16x from 1.28x, resulting in weaker performance in our base case,” S&P said in a press release.

The outlook is negative.

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