S&P rates Midland notes BBB-

Standard & Poor's said it assigned a preliminary BBB- rating to Midland Cogeneration Venture LP's $560 million senior secured notes due in 2025.

The proceeds will go toward the repayment of existing term loans, termination fees associated with interest rate swaps, repayment of an unsecured loan, payment of a dividend to project sponsors and payment of fees and expenses associated with the notes, S&P said.

The outlook is stable.

The rating assumes that the company will meet the agency's criteria for special-purpose entities, including the provision of an independent director and a non-consolidation opinion, S&P said.

Offsetting the support from the contractual framework are two credit factors.

First, the project has a steam and energy purchase agreement with Dow Chemical Co. While this agreement generates about 17% of revenues through 2015, the contract currently represents a net loss to the project under its current terms, the agency said.

Second is the presence of holding company debt, S&P said.

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