S&P lowers Chief Power loans

S&P said it lowered the rating on Chief Power Finance LLC’s $351 million senior secured term loan B facility due 2020 to B+ from BB, along with the rating on its $44 million senior secured working capital revolving credit facility due 2019 to B+ from BB.

The agency also said it removed the ratings from CreditWatch, where it was placed with negative implications in February.

The outlook is negative.

The 1 recovery rating is unchanged, indicating 90% to 100% expected default recovery.

The downgrades reflect ongoing weak market conditions in the PJM Interconnection market and an increasingly disadvantaged operating climate for coal-fired plants, S&P said.

The project’s plants – Keystone and Conemaugh – significantly underperformed relative to expectations in 2015, both operationally and financially, the agency said.

Persistently low power prices, spurred by lower gas prices, also generated low revenues, S&P added.

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