S&P downgrades FirstEnergy

S&P said it lowered the rating on FirstEnergy Solutions Corp. to CCC- from CCC.

The agency also said it lowered the rating on the company's secured debt to CCC+ from B- and on its unsecured debt to CCC- from CCC.

The recovery ratings of 1 and 4 on secured and unsecured debt, respectively, are unchanged.

The outlook is negative.

The downgrades reflect recent news that FirstEnergy Solutions is pursuing exchange discussions with its creditors, S&P said.

This appears to potentially accelerate the timeframe to default, the agency said.

An exchange that provides less-than-full compensation would be considered an event of default, S&P said, given the current low recovery expectations for this portfolio, as well as bond spreads indicating severe distress.

The negative outlook reflects an expectation that the issuer could potentially file for bankruptcy or enter into a distressed exchange within the next six months, the agency added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.