Moody’s eyes Granite for downgrade

Moody's Investors Service said it placed the ratings of Granite Generation, LLC under review for downgrade, including its B1 corporate family rating, its B1-PD probability of default rating and the B1 rating of its senior secured bank credit facilities. Granite's credit facilities are comprised of a term loan B due in November 2026 and a $100 million revolving bank credit facility due in November 2024. Granite's speculative grade liquidity rating is unchanged at SGL-2.

"The review of Granite's ratings for downgrade is prompted by our expectation that the outcome of the recent December 2022 PJM auction will likely result in low capacity prices for the 2024/25 planning year, based on our view of market fundamentals," said Nati Martel, vice president and senior analyst, in a press release.

"Also, the review considers management's disclosure that certain non-performing generation plants will be assessed capacity performance penalties in the wake of the Northeast's winter storm Elliott in December 2022", added Martel.

Moody’s said it will review the financial effect of the 2024-2025 PJM capacity prices on Granite amid expectations of declining energy margins at the company given the anticipated moderation in natural gas prices.

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