S&P affirms Sithe/Independence bonds

Standard & Poor's said it affirmed the B rating on Sithe/Independence Funding Corp.'s $559.5 million senior secured bonds and removed the rating from CreditWatch with developing implications, where it was placed on Aug. 3, 2005. The outlook is stable.

The rating action follows S&P's affirmation of Dynegy Inc.'s B corporate credit rating and the removal of the rating from CreditWatch with developing implications. Sithe/Independence is a 1,000 MW combined-cycle, gas-turbine plant in Scriba, N.Y.

The rating on Sithe/Independence's bonds 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, the agency said.

Under the base case scenario, allowing for fixed payments from Dynegy under the tolling and swap agreements, Sithe/Independence's debt service coverage ratio averages 1.7x.

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