S&P rates Raven Power loan BB-

Standard & Poor's said it assigned a BB- rating to Raven Power Finance LLC's $415 million senior secured facilities, consisting of a $375 million term loan B due in 2020 and a $40 revolving credit facility due in 2018.

The agency also said it assigned a 1 recovery rating, indicating 90% to 100% expected default recovery.

The outlook is stable.

The proceeds will be used to pay a roughly $174 million dividend to sponsors and refinance the remaining $173.3 million on its existing term loan and fund a major maintenance reserve, as well as pay the fees that are customary with such transactions.

A fund managed by Riverstone Holdings LLC indirectly owns 100% of Raven Power Finance, which in turn owns 2,649 megawatts of coal-fired generating plants, S&P said.

There is no other debt in the project structure and, consequently, all cash flows from the power plant support the rated project debt, the agency said.

Furthermore, lenders benefit from a modified cash flow sweep in which 100% of the excess cash flows pay off debt up to a pre-specified level based on a straight-line amortization, S&P added.

The ratings reflect business risk stemming from uncertainty in merchant energy and capacity markets, the agency said. There has been some instability in capacity markets in the region, although this has been largely mitigated through 2017 for this project, S&P said.

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