S&P affirms Elwood Energy

Standard & Poor's said it affirmed the BB- rating on Elwood Energy LLC's $402 million 8.159% amortizing senior secured bonds due 2026.

The agency also said it revised its recovery rating on the bonds to 1 from 3, indicating 90% to 100% expected recovery in a default.

The outlook remains negative, reflecting a forecast of low debt service coverage in 2013 and its exposure to merchant energy markets in subsequent years, S&P said.

Low energy and capacity market prices reduce the project's operating margins, the agency said, and high capital expenditures result in a depletion of cash reserves in 2021, five years before final debt maturity.

The negative outlook reflects the project's likely low debt service coverage in 2013 and the project's exposure to merchant risk after 2013, S&P said.

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