Moody's cuts Ameren Genco

Moody's Investors Service said it downgraded the senior unsecured and corporate family rating of Ameren Energy Generating Co. to B3 from B2 and the probability-of-default rating to B3-PD from B2-PD.

The outlook is negative. The action concludes the review of Ameren Genco's ratings.

The agency also downgraded Ameren Genco's $275 million senior notes series F 7.95% due 2032 to B3 (LGD 4, 51%) from B2 (LGD 4, 51%), $300 million senior notes series H 7.00% due 2018 downgraded to B3 (LGD 4, 51%) from B2 (LGD 4, 51%) and $250 million senior notes series I 6.30% due 2020 downgraded to B3 (LGD 4, 51%) from B2 (LGD 4, 51%).

The downgrade considers the company's weak cash flow generating prospects, declining liquidity and the continued depressed power market conditions in the Midwest region, according to the agency.

The action was also prompted by Dynegy, Inc.'s (B2/stable) plans to acquire Ameren Genco and the rest of Ameren Corp.'s (Baa3/stable) merchant coal fired generating portfolio, the agency noted.

"The terms and conditions of the acquisition by Dynegy will leave Ameren Genco with limited financial flexibility and finite liquidity resources to weather an anticipated prolonged period of low power prices," said Toby Shea, a Moody's vice president, said in a statement.

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