S&P rates Star West

Standard & Poor’s said it assigned a B+ debt issue rating to Star West Generation’s $450 million senior secured term loan due 2020 and $100 million senior secured revolving credit facility due 2020.

The agency also said it assigned a recovery rating of 2, indicating 70% to 90% expected default recovery.

The outlook is stable.

Star West’s portfolio consists of two natural gas-fired power plants located in Arizona.

The rating is constrained by the company’s lower debt service coverage ratios after presumed refinancing in 2020, S&P said.

At that point, Star West’s assets will be fully exposed to merchant markets, as the term loan does not fully amortize by maturity, the agency said.

The stable outlook reflects an expectation of high availability and steady cash flow through the term loan’s maturity, S&P said.

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