S&P alters West Deptford view to negative

S&P said it revised the outlook for West Deptford Energy Holdings LLC to negative from stable and affirmed the BB- on the project’s senior secured term loan B and credit facility.

S&P also revised the recovery expectation on the project loans to 2 from 1, reflecting higher projected debt levels at default. The 2 recovery rating indicates expectations for substantial (70%-90%; rounded estimate: 85%) recovery in a default scenario

A planned outage of 17 days had to be extended earlier this year. The extended outage, coupled with a mild winter and the unprecedented decline in power demand across wholesale power markets this year due to the pandemic, resulted in a realized energy margin of around $5.5 million as of June 2020, below the agency’s expectations for the year.

“The outlook revision reflects our view that WDE could face some pressure maintaining a debt service coverage ratio (DSCR) of 1.4x and sweep cash in 2020 if a recovery in the broader power sector is sluggish and market fundamentals continue to be unfavorable,” S&P said in a press release.

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