Moody's rates Coleto first-lien loans B2

Moody's Investors Service said it assigned a B2 rating to the proposed first-lien credit facilities of Coleto Creek LP. The facilities comprise a $935 million senior secured term loan due 2013, a $170 million letter-of-credit facility due 2013 and $60 million of revolving credit and letter-of-credit facilities due 2011.

The outlook is stable.

Moody's said the primary drivers of the B2 rating are its highly levered capital structure, which, when combined with existing power sales agreements, results in very low coverage of debt service for the next few years and reliance on merchant sales for debt amortization, which increases cash flow volatility.

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