S&P puts Midland Cogeneration on negative watch

Standard & Poor's said it placed the BB- ratings on Midland Cogeneration Venture LP's $300 million bonds issued by Midland Funding Corp. II and The Economic Development Corp. of the County of Midland on CreditWatch with negative implications.

The ratings on negative watch include Midland Funding Corp. II's $100 million 13¼ % bonds at BB-, Midland County Economic Development Corp.'s $181 million 6 5/8% bonds at BB- and $19 million 6 2/3% bonds at BB-.

The CreditWatch listing follows the announcement on Nov. 1 of an asset impairment charge of about $1 billion, S&P said. The charge relates to the current high natural gas prices, is noncash and should not negatively affect the project's economics in the short term as they have hedged a substantial amount of their gas purchases.

Nevertheless, S&P said it is concerned about CMS Energy Corp.'s statement in its third-quarter earnings call, where the company noted that it is exploring strategic alternatives for Midland and has some concern about Midland's long-term financial viability.

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