Moody's cuts Northeast Biofuels

Moody's Investors Service said it downgraded the senior secured rating of Northeast Biofuels, LP to B2 from B1. The rating remains on review for downgrade.

The affected bank facilities are a $140 million senior secured term loan due 2013 and a $12 million senior secured working capital facility due 2011.

Moody's said the downgrade reflects the recent termination of a crush margin hedging agreement that covered 65% of the project's ethanol output that provided downside protection in an adverse commodity price environment.

The downgrade also considers an increase in credit risk relative to 2006 and delays in construction that have resulted in increased refinancing risk, the agency said.

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