Moody's upgrades Illinois Power

Moody's Investors Service said it upgraded the ratings of Illinois Power Co., including the senior secured debt to B1 from B3 and senior unsecured debt to B2 from Caa1, following the announcement that Ameren Corp. had signed a definitive agreement to purchase the stock of Illinois Power and a 20% interest in Electric Energy Inc. from Dynegy Inc. for about $2.3 billion.

Illinois Power's ratings remain under review for possible upgrade.

Moody's said the rating action incorporates Moody's expectation that the transaction is highly likely to occur in substantially the proposed form and that Illinois Power's creditworthiness will benefit from ownership by a more highly rated entity.

The rating action considers the relatively stable financial performance expected by Illinois Power and plans to reduce leverage and improve credit metrics following the acquisition by Ameren.

Moody's noted that Ameren's financing plan contemplates the issuance of new Ameren common stock, which will be used, among other things, to pay the cash portion of the acquisition price to Dynegy and to reduce certain Illinois Power debt.

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