S&P rates Kestrel facilities BB

S&P said it assigned its BB preliminary issue-level rating to Kestrel Acquisition LLC's $375 million senior secured term loan B and $40 million senior secured revolving credit facility.

The outlook is stable.

The 1 preliminary recovery rating reflects an expectation of very high (90%-100%; rounded estimate: 95%) recovery in the event of default.

Proceeds will be used to fund a portion of the purchase price for its pending acquisition of the Hunterstown combined cycle gas turbine in Pennsylvania.

“The power plant is subject to fully merchant cash flows, with exposure to capacity prices (in uncleared periods) and power prices within the Pennsylvania-Jersey-Maryland (PJM) market pressured by weak demand growth and oversupply in recent years,” the agency said in a news release.

The agency said the preliminary rating on the plant reflects its heat rate, which may lead to an annual capacity factor of about 65%-70%, exposure to market prices in PJM and initial leverage lower than that of its peers.

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