S&P cuts Elwood Energy notes

S&P said it lowered Elwood Energy LLC’s senior secured notes to BB from BB+ based on the agency’s forecast credit metrics. The recovery rating remains 1, indicating an expectation for very high (90%-100%; rounded estimate: 95%) recovery in default.

“The downgrade of Elwood's senior notes to BB from BB+ reflects a substantial decline in the capacity price in the PJM ComEd zone to $69 per MW day for 2022/2023 from $196 per MW day in 2021/2022. We expect the lower cleared capacity price to lead to a material decline in Elwood's revenue and operating cash flow, resulting in a minimum debt service coverage ratio (DSCR) of 1.1x in 2022 and 1.2x in 2023,” S&P said in a press release.

The outlook is stable.

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