Moody’s cuts Cleco, rates loans Baa3

Moody's Investors Service said it downgraded Cleco Corp.’s senior unsecured rating to Baa3 from Baa1 and affirmed Cleco Power LLC's A3 senior unsecured rating upon the closing of their acquisition by an investor group led by Macquarie Infrastructure Partners.

At the same time, the agency assigned an issuer and senior secured rating of Baa3 to Cleco Corp.'s new $1.35 billion senior secured bank term loan and $100 million senior secured revolving credit facility. The new $100 million senior secured revolving credit facility will replace the pre-existing $250 million senior unsecured revolving credit facility, at which time the senior unsecured rating will be withdrawn.

The outlooks for Cleco Corp. and Cleco Power are stable.

Moody’s said the Baa3 senior secured rating on Cleco Corp.'s bank credit facilities is the same as its issuer rating because the security pledge is limited to the equity interests in Cleco Power. As a result, the agency did not assign any notching lift based on the security collateral and view Cleco Corp's secured credit quality similar to an unsecured claim within the consolidated capital structure.

"The downgrade of Cleco Corp's rating is triggered by the significant amount of new debt issued at the parent level as a means to finance the acquisition by the Macquarie-led investor group," Moody's vice president, senior analyst Jeffrey Cassella said in a news release.

"In affirming Cleco Power's senior unsecured rating, while downgrading its parent, we are widening the notching differential between the ratings reflecting the material increase in leverage at Cleco Corp and the adoption of ring-fence type provisions expected to provide credit protection at the utility."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.