Moody's cuts AES Eastern

Moody's Investors Service said it downgraded the 1999 series trust pass-through certificates of AES Eastern Energy, LP to B3 from Ba2.

The outlook remains negative.

The downgrade reflects a dramatic deterioration in the company's prospects and performance that is primarily a result of compressed dark spreads and is reflective of the company's severely strained liquidity position, Moody's said.

Although AES Eastern's larger facilities are still among the lowest cost coal generators in the region, the combination of low power prices and high fuel costs has resulted in these facilities running less frequently, further reducing the amount of variable margin available to cover fixed costs, the agency said.

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