S&P affirms Sithe/Independence

Standard & Poor's said it affirmed its B rating on Sithe/Independence Funding Corp.'s $559.5 million senior secured bonds and removed the company's ratings from CreditWatch with developing implications, where they were placed in September 2006 following Dynegy's announced bid to acquire LS Power's power plants.

The outlook is stable.

The rating action follows an annual review of the project, and the outlook reflects S&P's earlier revision on Dynegy and does not reflect any change in the project's fundamentals, according to the agency.

The B rating reflects Dynegy's credit risk due to its 100% ownership of the project and the tolling agreements it has for almost the entire output of the project, S&P said.

The stable outlook reflects expectations for relatively stable financial performance over the next two years, given the significantly hedged output and expectations that all of DHI's units will operate in a manner consistent with their recent track record, the agency said.

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