Moody’s lowers Sandy Creek debt to B3

Moody's Investors Service said it downgraded the senior secured ratings of Sandy Creek Energy Associates, LP to B3 from B2 and revised the outlook to stable from negative.

The senior secured credit facilities are comprised of a $1,025,000,000 term loan due 2020 (about $874.5 million outstanding as of March 31), a $102 million letter-of-credit facility due 2020 to backstop tax-exempt variable-rate notes, and a $75 million working capital facility due 2020.

Sandy Creek owns 64% of the Sandy Creek Energy Station, a 945 MW single unit, once-through super-critical cycle, pulverized coal-fired power generating facility in Riesel, Texas. Sandy Creek is a bankruptcy-remote entity owned by affiliates of LS Power (Sponsor).

Moody’s said the downgrade principally reflects Sandy Creek’s exposure to sustained weak merchant energy margins and related cash flow owing to low natural gas prices and low energy prices in the ERCOT region where the plant operates, which has also been impacted by increased renewable penetration, and the agency’s expectation that these factors will continue to affect merchant financial results over the next few years.

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