Moody's rates Reliant notes B3, may upgrade Orion

Moody's Investors Service said it affirmed Reliant Energy Inc.'s B2 corporate family and probability-of-default ratings, B2 senior secured rating and SGL-2 speculative grade liquidity rating and assigned a B3 rating to the company's planned issue of $1.25 billion senior unsecured notes maturing in 2014 and 2017.

The outlook is stable.

Proceeds from the notes will be used to fund the company's recently announced refinancing transaction.

The agency also placed Orion Power Holdings' B2 senior unsecured rating on review for possible upgrade, reflecting a lower expected loss-given-default estimate as a result of the significant reduction of senior secured parent company debt.

Moody's said the B2 rating reflects the company's relatively high business and operating risk profile, the inability to generate consistent levels of cash flow relative to its significant debt position and the company's longer-term corporate strategic plans.

The rating is supported by the company's over-all liquidity position and the availability of additional liquidity, if needed, and by the agency's expectations that the cash flows of the company should begin improving with market conditions.

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