S&P slashes West Deptford Energy

S&P said it downgraded West Deptford Energy Holdings LLC’s senior secured term loan B and credit facility to B- from B+. The 2 (70%-90%) recovery rating is unchanged, though S&P revised its rounded estimate to 70% from 75% to indicate an expectation for higher projected debt levels in default.

The downgrade follows the recent auction of 2022/2023 Pennsylvania-New Jersey and Maryland Interconnection, S&P said.

“WDE could face further cash flow challenges. The PJM BRA for EMAAC cleared at $97.86 per MW-day for the 2022/2023 delivery year, which was lower compared to our expectation of $125 per MW-day. Given the expiration of WDE's revenue put in 2020 and the lower capacity prices, the project's reliance on its volatile energy margins has increased. We expect the lower capacity prices will likely negatively affect WDE's cash flow generation and increase its amount of debt outstanding at maturity to $379 million, which is up from our previous expectation of $360 million-$370 million,” S&P said in a press release.

The outlook is negative.

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