S&P lowers Hunterstown loans

S&P said it lowered its issue-level ratings on Kestrel Acquisition LLC's (Hunterstown) $550 million senior secured term loan B and $40 million senior secured revolving credit facility to BB- from BB.

The 1 recovery rating remains and reflects an expectation of very high recovery for lenders (90%-100%; rounded estimate: 95%) in a default.

The outlook is stable.

Kestrel upsized its term loan B by $150 million to fund a one-time distribution of $145 million to its sponsors and pay transaction fees and expenses.

“We expect the asset to achieve a capacity factor of about 75%-80% and are now recognizing some incremental cash flow in our forecast from the project's gas optimization plan, which stems from its ability to buy and sell gas at different points along the Tetco pipeline to monetize spreads,” the agency said in a news release.

“We are, however, lowering our rating on the project's debt to BB- from BB given the increased debt and lower debt service coverage ratios (DSCRs).”

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