Moody's introduces new ratings

Moody's Investors Service has introduced two new ratings: probability-of-default ratings and loss-given-default ratings.

The agency's current long-term credit ratings are opinions about expected credit loss that incorporate both the likelihood of default and the expected loss in the event of default. The loss-given-default rating methodology will disaggregate these two key assessments in long-term ratings. The agency said the methodology will also enhance the consistency in its notching practices across industries and will improve the transparency and accuracy of its ratings, as Moody's research shows that credit losses on bank loans have tended to be lower than those for similarly rated bonds.

Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations.

Loss-given-default assessments (or LGDs) are assigned to individual rated debt issues - loans, bonds and preferred stock - and express Moody's opinion of expected loss as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0%-9%) to LGD6 (loss anticipated to be 90%-100%).

Below is a list of the rating actions for Moody's rated companies, sorted by industry. The rating immediately after the company name denotes the corporate family rating and the percentages next to the LGDs represent the expected loss-given-default rates.

U.S. power and electric

AES Corp., B1; probability-of-default rating: B1; term loan and revolver, upgraded to Ba1 from Ba2, LGD1, 2%; second-priority senior secured notes, Ba3, LGD3, 40%; senior unsecured notes, B1, LGD4, 55%. AES Trust VII and AES Trust III, convertible trust preferred securities, B3, LGD6, 93%.

Allegheny Energy, Inc., Ba2; probability-of-default rating: Ba2; credit facility, Ba2, LGD4, 50%. Allegheny Energy Supply Co., LLC, Ba2; probability-of-default rating: Ba2; credit facility, upgraded to Baa3 from Ba2, LGD2, 22%; notes, Ba3, LGD5, 77%. Allegheny Energy Generating Co., debentures, Ba3, LGD5, 77%.

Aquila, Inc., B1; probability-of-default rating: B2; credit facility, upgraded to Ba1 from Ba2, LGD1, 2%; notes, B2, LGD3, 43%; convertible subordinated debentures, Caa1, LGD5, 88%; senior unsecured shelf, prospective B2, LGD3, 43%.

CMS Energy Corp., Ba1; probability-of-default rating: Ba2; revolver, Ba2, LGD3, 49%; notes, Ba3, LGD4, 69%; preferred stock, upgraded to Ba3 from B3, LGD5, 89%; senior unsecured shelf, prospective Ba3, LGD4, 69%; subordinated debt shelf, upgraded to prospective Ba3 from prospective B2, LGD5, 87%; preferred stock shelf, upgraded to prospective Ba3 from prospective B3, LGD5, 89%.

CMS Energy Trust I, CMS Energy Trust II and CMS Energy Trust III, preferred stock shelf, upgraded to prospective Ba3 from prospective B2, LGD5, 87%. Consumers Energy Co., preferred stock, upgraded to Ba2 from Ba3, LGD3, 47%; senior unsecured shelf, prospective Ba1, LGD3, 40%; subordinated debt shelf, prospective Ba2, LGD3, 47%. Consumers Energy Co. Financing V and Consumers Energy Co. Financing VI, preferred stock shelf, prospective Ba2, LGD3, 47%.

Cogentrix Energy, Inc., Ba2; probability-of-default rating: Ba2. Cogentrix Delaware Holdings Inc., revolver and term loan, Ba2, LGD4, 50%.

Covanta Energy Corp., Ba3; probability-of-default rating: Ba3; revolver, term loan and letter-of-credit facility, B1, LGD4, 64%; second-lien term loan, B2, LGD5, 84%. MSW Energy Holdings LLC and MSW Energy Holdings II LLC, notes, Ba3, LGD4, 55%. Covanta ARC LLC, senior secured notes, Ba1, LGD2, 17%; industrial revenue bonds, Ba2, LGD2, 28%.

Dynegy Holdings Inc., B1; probability-of-default rating: B1; revolver, term loan and letter-of-credit facility, upgraded to Ba1 from Ba3, LGD1, 8%; second-priority senior secured notes, upgraded to Ba1 from B1, Ba1, LGD2, 19%; senior debentures and senior unsecured notes, B2, LGD4, 61%; senior unsecured shelf, prospective B2, LGD4, 61%; subordinated shelf, prospective B3, LGD6, 96%. Dynegy Danskammer, LLC and Dynegy Roseton, LLC, pass-through trust certificates, upgraded to Ba3 from B2, LGD3, 35%. NGC Corp. Capital Trust I, subordinated capital income securities, B3, LGD6, 96%. Dynegy Capital Trust II, trust preferred stock shelf, prospective B3, LGD6, 96%. Dynegy Capital Trust III, trust preferred stock shelf, upgraded to prospective B3 from prospective Caa1, LGD6, 97%. Dynegy Inc. senior unsecured, subordinated and preferred stock shelves, prospective B3, LGD6, 97%.

Edison Mission Energy, Ba3; probability-of-default rating: Ba3; notes, B1, LGD5, 72%. Midwest Generation, LLC, revolver and term loan, upgraded to Baa3 from Ba2, LGD1, 3%; secured second-lien notes, upgraded to Ba2 from Ba3, LGD2, 29%; guaranteed pass-through certificates, upgraded to Ba2 from B1, LGD2, 28%. Mission Energy Holding Co., notes, B2, LGD6, 93%.

Mirant Corp., B2; probability-of-default rating: B2. Mirant Mid-Atlantic, LLC, pass-through certificates, Ba2, LGD2, 12%. Mirant North America, LLC, revolver and term loan, upgraded to Ba3 from B1, LGD3, 32%; notes, B2, LGD4, 52%. Mirant Americas Generation, LLC; senior unsecured bonds, downgraded to Caa1 from B3, LGD5, 85%.

PSEG Energy Holdings LLC, Ba3; probability-of-default rating: Ba3; notes, Ba3, LGD4, 50%.

NRG Energy Inc., Ba3; probability-of-default rating: Ba3; revolver and term loan, upgraded to Ba1 from Ba2, Ba1, LGD2, 25%; notes, B1, LGD5, 80%; convertible preferred stock and perpetual preferred stock, upgraded to B2 from B3, LGD6, 98%; senior secured shelf, upgraded to prospective Ba1 from prospective Ba2, LGD2, 25%; senior unsecured shelf, prospective B1, LGD5, 80%; subordinated shelf, prospective B2, LGD6, 97%; preferred stock shelf, upgraded to prospective B2 from prospective B3, LGD6, 98%.

Reliant Energy, Inc., B2; probability-of-default rating: B2; revolver, term loans, notes and revenue bonds, B2, LGD3, 49%; convertible notes, Caa1, LGD6, 96%; senior secured shelf, prospective B2, LGD3, 49%; senior unsecured shelf, downgraded to prospective Caa1 from prospective B3, LGD5, 78%; subordinated shelf, prospective Caa1, LGD6, 96%; preferred stock, prospective Caa1, LGD6, 97%. Reliant Energy Mid-Atlantic, pass-through certificates, upgraded to Ba2 from B2, LGD2, 21%. Orion Power Holdings, notes, upgraded to B2 from B3, LGD4, 51%.

Sierra Pacific Resources, Ba2; probability-of-default rating: Ba3; issuer rating: B1; senior unsecured debt, B1, LGD5, 81%; senior unsecured shelf, prospective B1, LGD5, 81%; subordinated shelf, prospective B2, LGD5, 88%. Sierra Pacific Resources Capital Trust I and Sierra Pacific Resources Capital Trust II, preferred securities shelf, prospective B2, LGD5, 88%. Nevada Power Co., issuer rating, downgraded to B1 from Ba3; revolver and senior secured debt, Ba1, LGD2, 23%; senior secured shelf, prospective Ba1, LGD2, 23%; preferred stock shelf, upgraded to prospective B1 from prospective B2, LGD5, 74%. Sierra Pacific Power Co., issuer rating, downgraded to B1 from Ba3; revolver and senior secured debt, Ba1, LGD2, 23%; senior secured shelf, prospective Ba1, LGD2, 23%; preferred stock shelf, upgraded to prospective B1 from prospective B2, LGD5, 74%.

TECO Energy, Inc., Ba1; probability-of-default rating: Ba2; notes and revenue bonds, Ba2, LGD4, 56%; senior unsecured shelf, prospective Ba2, LGD4, 56%; subordinated shelf, prospective Ba3, LGD5, 86%; preferred stock shelf, upgraded to prospective Ba3 from prospective B1, LGD5, 88%. TECO Capital Trust I, trust preferred securities, Ba3, LGD5, 86%.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.