Moody's may downgrade Wolf Hollow

Moody's Investors Service said it placed the B1 first-lien senior secured rating and B2 second-lien senior secured rating of Wolf Hollow I LP under review for possible downgrade.

The review reflects the project's poor financial performance caused by higher-than-expected forced outage levels over the last 18 months, the agency said. In view of a series of forced outage incidences, the project has incurred higher operating and maintenance costs and higher capital costs and has been required to buy expensive power in the spot market to satisfy obligations under its power purchase agreement with J. Aron & Co.

Moody's said the review also considers the lack of a meaningful level of delevering of the project's term loans to date and the agency's concern that the project may not be able to meet its financial covenants in 2008 should operating problems persist.

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