Moody’s cuts Southeast PowerGen facilities

Moody's Investors Service said it downgraded the rating assigned to Southeast PowerGen LLC's $503 million senior secured credit facilities to B1 from Ba3.

The outlook is negative.

The credit facilities consist of a $433 million term loan due December 2021 and a $70 million senior secured revolving credit/letter of credit facility due December 2019.

The agency said the downgrade reflects lower-than-anticipated financial performance driven by weak merchant power pricing environment for the company’s two merchant assets, the most significant of which is Effingham County Power Station, a 510-megawatt natural gas-fired combined-cycle plant.

Effingham has generated an operating loss since operating on a merchant basis in January 2016. As such, Southeast PowerGen has been unable to meet anticipated financial metrics, including consolidated debt service coverage ratio that exceeds 1.3x and the ratio of cash flow to debt of 5%.

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