S&P lowers Midland Cogeneration bonds

Standard & Poor's said it lowered its rating on Midland Cogeneration Venture LP's (MCV) $274 million bonds to B from BB-.

The rating on the bonds, which were issued by Midland Funding Corp. II and The Economic Development Corp. of the County of Midland, remains on CreditWatch with negative implications where it was placed Nov. 3.

The rating action reflects S&P's concern that if natural gas prices remain high after 2007, when a large portion of MCV's natural gas hedges expire and Consumers Power Co. invokes its regulatory out right under the power purchase agreement in 2007, then MCV's cash reserves could be depleted.

S&P noted the rating remains on CreditWatch with negative implications to reflect the uncertainty that remains regarding the actions the partners may take with respect to MCV.

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