Moody's drops La Paloma

Moody's Investors Service said it downgraded La Paloma Generating Co.'s first-lien debt rating to B2 from B1 and confirmed the second-lien debt at B3.

The outlook is negative.

The agency said that this concludes the review initiated on March 11.

The rating action reflects Moody's expectation that La Paloma's financial and operating performance is unlikely to improve substantially in the near to intermediate term.

Since 2006, a combination of operating problems and lower than expected energy margins caused La Paloma's debt service coverage ratios to average around 1 times and FFO to Debt to average around 1%, Moody's also noted.

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