S&P cuts FirstLight loan

Standard & Poor's said it lowered the rating on FirstLight Power Resources Inc.'s first-lien facilities to B from B+ and revised the recovery rating to 3 from 2. The 3 rating indicates expectations of a meaningful (50% to 70%) recovery of principal in a default scenario.

The outlook is negative.

The facilities consist of a $550 million first-lien term loan due 2013 along with a $70 million working capital facility due 2011.

S&P affirmed the CCC+ rating on the project's $170 million second-lien term loan. The recovery on this tranche remains 6, indicating the expectations of a negligible (0& to 10%) recovery.

The downgrade stems from refinancing risk, continued weakness in capacity markets in New England and the potential for covenant trips in the latter half of 2011, the agency said.

Simultaneously, S&P affirmed the BB- rating on FirstLight Hydro Generating Co.'s $320 million senior secured first mortgage bonds. The recovery on the first mortgage bonds remains 1, indicating very high (90% to 100%) recovery. The outlook is stable.

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