S&P affirms MSW Energy ratings

Standard & Poor's said it affirmed its BB rating on MSW Energy Holdings LLC's $200 million seven-year senior secured notes.

The outlook is stable.

The proceeds from the bond issuance in June 2003 were used to acquire Duke Global Energy's 50% ownership interest in Ref-Fuel Holdings LLC, whose sole asset is 100% ownership of American Ref-Fuel Co. LLC (BBB/stable/--).

The rating on MSW Energy Holdings reflects the following risks: the company relies upon cash distributions from ARC to pay interest expense on the senior notes; this cash flow from ARC is structurally subordinated to debt at American Ref-Fuel as well as subordinated to debt at some of American Ref-Fuel's projects.

Supporting the ratings, cash flow from American Ref-Fuel's projects is relatively stable and predictable. Amercian Ref-Fuel's plants benefit from economies of scale, process the largest amount of waste in the region, are near major population centers, and serve a diversified client group.

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