Moody’s gives Ba3 to Kestrel's facilities

Moody's Investors Service said it assigned a Ba3 rating to Kestrel Acquisition, LLC's $415 million senior secured credit facilities consisting of a $375 million seven-year term loan and a $40 million five-year revolving credit facility.

The outlook is stable.

Proceeds from the term loan combined with equity contributions from Platinum Equity will be used to acquire the 810-megawatt combined cycle gas-fired Hunterstown Generating Station located in eastern PJM. The acquisition is expected to close in the second quarter. Cash flow generated by Hunterstown is Kestrel's sole revenue source for debt repayment.

Fitch said Kestrel's Ba3 rating is supported by near-term cash flow certainty, an established operating history and a manageable debt profile.

The Ba3 rating also considers the project's single asset operating risk, exposure to merchant power markets and projected financial metrics under Moody's base case assumptions that are somewhat weak for the Ba rating category, the agency noted.

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