S&P cuts KGen loan tranche A to B

Standard & Poor's said it lowered its preliminary rating on electricity generator KGen LLC's proposed $300 million senior secured term loan tranche A to B from B+.

S&P said the downgrade reflects the fact that KGen has increased the size of the tranche A facility to $300 million while reducing the size of the tranche B facility to $175 million, retaining the overall size of $475 million for the credit facilities.

At the same time, S&P affirmed its preliminary B- rating on KGen's proposed $175 million senior secured term loan tranche B and lowered the recovery rating on tranche B to 4 from 1.

The proceeds from the loans will be used to refinance an existing $325 million loan, repay a $50 million seller note and fund $88 million combined to the required liquidity reserve and cash debt service reserve.

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