Moody's gives La Frontera loan B1

Moody's Investors Service said it assigned a B1 to La Frontera, LLC's roughly $1 billion senior secured term loan B due June 2020.

The rating outlook is stable.

"The B1 rating reflects the plant's significant merchant exposure, with approximately 33%-37% of the facility's gross margin hedged over the life of the financing as well as minimal remaining sponsor equity following the substantial up-front dividend payout at financial close," Moody's analyst Charles Berckmann said in a news release.

"While market fundamentals are tightening in ERCOT, the absolute amount of debt is substantial which we believe is likely to expose the plant to refinancing risk at term loan maturity if merchant margins post-2015 do not materialize," Berckmann added in the release.

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