S&P lowers Homer City, debt to CC

S&P said it lowered its corporate credit ratings on Homer City Generation LP to CC from CCC-.

The outlook is negative.

The agency also downgraded the issue-level ratings on the company's senior secured debt to CC from CCC and revised the recovery rating to 3 from 2. The 3 recovery rating indicates expectations for meaningful (50%-70%; higher end of the range) recovery if a default occurs.

"The downgrade to CC reflects our view that default is a virtual certainty," S&P credit analyst Kimberly Yarborough said in a news release.

"It follows Homer City's Oct. 3 announcement that it had entered into a forbearance agreement with a majority of its noteholders to extend its debt payment deadline to Oct. 17. Despite the extension, we expect the company to be unable to pay its debt payment and anticipate that it will enter into Chapter 11 proceedings in the near future."

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