S&P ups Elwood Energy to stable

Standard & Poor's said it affirmed its B+ rating on Elwood Energy LLC's $402 million 8.159% senior secured bonds due 2026.

At the same time, the outlook was revised to stable from negative, reflecting an improvement in the near-term prospects of Aquila Inc. (B-/Watch positive/B-3), the agency noted.

S&P said the ratings on Elwood reflect Aquila's credit risk, exposure to partial merchant risk from 2013, full merchant risk after 2017 and power contracts that are above market due to the MAIN's excess generating capacity, which could depress power prices for years to come.

Offsetting these risks are revenues from a highly creditworthy offtaker, Exelon Generation Co. LLC (BBB+/Watch negative/A-2), representing 52% of cash flows through 2012, $37.7 million of collateral posted by Aquila that covers 12 months of capacity payments and a good operations track record, with availabilities that have averaged above 99% since operations began, the agency said.

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