Moody's cuts Longview Power

Moody's Investors Service said it downgraded the senior secured credit facilities of Longview Power, LLC to B2 from Ba3.

The outlook was revised to negative.

The downgrade reflects weaker expectations for the project's financial performance relative to the time of the financing due to the deterioration in wholesale energy markets and an increase in projected fuel supply costs, Moody's said.

Unless there is meaningful recovery in the energy market in which the project is located, Moody's said it believes Longview will be challenged to achieve 1.0x debt service coverage in 2011.

While a modest recovery is expected beyond that point, the project is likely to pay down less debt over the term of its loan than was initially expected, which increases refinancing risk when the loan matures in 2014, Moody's said.

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