S&P: Sithe on watch

Standard & Poor's said that the CC rating on Sithe/Independence Funding Corp.'s $408.6 million of senior secured bonds remains on CreditWatch with negative implications, reflecting the rating on parent Dynegy Inc. (CC/negative watch).

The bonds have a recovery rating of 1, indicating the expectation of very high (90% to 100%) recovery in the event of a payment default.

The Sithe rating is the same as the Dynegy corporate credit rating given its significant exposure to Dynegy as the tolling counterparty and project owner as well as the lack of any structural ring-fencing provisions that can serve to separate the default risk on Sithe from that of Dynegy, the agency said.

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