Moody's rates Heritage Power loan B1

Moody's Investors Service said it assigned a B1 rating to Heritage Power, LLC's proposed $656.1 million senior secured credit facilities, consisting of a $550 million seven-year term loan B, $61.1 million seven-year term loan C and $45 million five-year revolving credit facility.

The outlook is stable.

The proceeds from the secured term loan will be used to repay existing debt of $406 million at the parent holding company, GenOn Holdings, LLC, Moody's said.

The proceeds will also provide $70 million of liquidity and collateral needs at GenOn, fund a $20 million liquidity reserve at Heritage to support its liquidity needs for the first 36 months and pay a $29.8 million distribution to the sponsor, Moody's said.

The ratings also reflect the near-term cash flow and revenue visibility expected over the next few years, owing to Heritage's reliance on revenues from known cleared capacity auction results through 2022, the agency said.

Those factors are balanced against expected weak financial results during 2020, owing to comparatively low capacity payments during those two years, along with the potential volatility of capacity prices beyond 2022, Moody's said.

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