S&P cuts Elwood Energy

Standard & Poor's said it lowered its rating on Elwood Energy LLC's $368 million bonds due 2026 to B+ from BB.

The outlook is negative.

S&P said the rating action reflects the recent downgrade of Aquila Inc. to CCC+ from B-. Under two power sales agreements, Aquila provides about 48% of Elwood's contractual net operating cash flow through 2012 and thereafter 100% of contractual cash flow until 2017. Under similar power sales agreements, Exelon Generation Co. (A-/negative/A-2) and Engage, an unrated subsidiary of Westcoast Energy Inc. (BBB+/stable/--), now owned by Duke Energy, provide the rest of the cash flow through 2012.

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