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Moody's downgrades Elwood Energy
Moody's Investors Service said it downgraded the rating on Elwood Energy LLC's $84 million 8.159% senior secured bond due 2026 to Ba2 from Ba1.
“The downgrade to Ba2 reflects a more challenging business environment for Elwood's collection of 1.35 GW of peaking power plant units, which rely on capacity auction revenues for debt service. The outlook for PJM Interconnection, L.L.C. (Aa2 stable)'s 2023/2024 capacity auction has darkened considerably, particularly in the Comed zone where Elwood competes,” Moody’s said in a press release.
Illinois recently approved legislation to subsidize nuclear facilities increases projected supply in the Comed zone that will bid into the next capacity auction. Moody’s warned this development could further pressure Comed capacity auction prices below the weak June 2021 price of $68 per mw-day for the 2022/2023 planning year, a significant stepdown from the current $195 per mw-day price for the 2021/2022 planning year.
The outlook is stable.
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