Moody’s rates Talen Energy loan Ba1

Moody's Investors Service said it assigned a Ba1 rating to a $600 million seven-year senior secured term loan to be issued by Talen Energy Supply, LLC upon the closing of its proposed merger with an affiliate of Riverstone Holdings LLC.

The remainder of Talen's ratings, including its Ba3 corporate family rating, remain under review pending satisfaction of the merger conditions.

Moody’s said the Ba1 rating assigned to the term loan is driven by its expected priority position in Talen's post-merger capital structure and reflects our view that, upon conclusion of the merger, Talen's corporate family rating, which is currently under review for downgrade, would likely move down by one notch, to B1.

The agency’s view is based on its current understanding of the transaction, and considers the resulting financial and operating prospects for Talen, which includes reduced financial flexibility as a result of increased leverage and lower liquidity. This reduced flexibility comes at a time when the merchant power market remains in the midst of a prolonged cyclical downturn.

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