S&P puts Southeast PowerGen on watch

Standard & Poor’s said it placed the BB rating on Southeast PowerGen LLC on CreditWatch with negative implications.

The recovery rating of 2 is unchanged, indicating 70% to 90% expected default recovery.

The CreditWatch placement stems from the inability of Southeast PowerGen to re-contract its Effingham plant in early 2016, S&P explained.

When the project was originally assigned ratings in late 2014, S&P said it assumed that Effingham and Sandersville would have re-contracted at prices of $6.00 per kilowatt a month and $2.50 per kilowatt a month, respectively, and that this would have limited market risk to a significant degree.

However, since then market power prices throughout the United States have collapsed on lower-than-expected demand and winnowing natural gas prices, the agency said.

These two assets are now largely exposed to market conditions, S&P said.

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