Moody's rates Mirant loan Ba3, notes B1

Moody's Investors Service said it assigned a Ba3 rating to the proposed $1 billion six-year senior secured revolving credit facility and $500 million seven-year senior secured term loan facility of Mirant North America, LLC (MNA), an indirect subsidiary of Mirant Corp. and a B1 rating to the $850 million senior unsecured notes to be offered by MNA and Mirant Finance Corp. as co-issuers.

Proceeds from these proposed offerings will be used to provide exit financing to enable the new Mirant and various domestic subsidiaries to emerge from bankruptcy protection, the agency said.

The outlook is stable.

According the Moody's, ratings incorporate the following strengths: favorable cost positioning and locational value of Mirant's Mid-Atlantic based coal-fired base load generating units in the current high natural gas price environment provides a significant source of cash flow and the diversity of the company's electric generating facilities with regard to regional location, fuel type and dispatch profile helps to temper operating risks.

However, the ratings also incorporate concerns that include substantial exposure to volatile margins in the merchant power market due to limited hedging and the lack of long term power purchase agreements.

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