Moody's lowers GenOn

Moody's Investor Service said it downgraded the senior secured pass-through certificates of GenOn REMA, LLC to B1 from Ba1.

Concurrently, Moody's affirmed the corporate family and probability of default ratings of GenOn Energy, Inc. along with its B3 senior unsecured rating.

As part of this rating action, Moody's revised GEN's speculative grade liquidity rating to SLG-2 from SGL-1 and also upgraded the senior secured revolver and term loan to B1 from B2.

Debt instrument ratings at GenOn Americas Generation, LLC and at GenOn Mid-Atlantic, LLC were also affirmed.

The outlook is negative.

"Low gas prices combined with stricter environmental regulations continue to create headwinds for the GenOn family and especially for GenOn REMA, which will depend on cash injections by its parent to fund mandated environmental retro-fits over the next several years. A prolonged period of projected negative free cash flow at GenOn REMA along with the announced deactivation/retirement of 68% of its base-load generating assets outweigh the structural protections of the lease. GenOn REMA's reliance on GEN for capital injections lead us to move GenOn REMA's rating closer to GEN's corporate family rating," Moody's vice president and senior analyst Bill Hunter said in a news release.

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