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Moody's rates Topaz loans B1
Moody's Investors Service said it assigned a B1 rating to Topaz Power Holdings, LLC's $560 million of seven-year senior secured term loans and $30 million of four-year senior secured revolving credit facilities and revised the outlook to stable from negative.
Proceeds will be used to repay $528 million of term loans due November 2014 along with balances outstanding under a $45 million revolver due May 2013 and to pay expenses and swap breakage.
The agency said the B1 rating is driven primarily by the inherent volatility underlying Topaz's ability to generate cash flow, which is highly dependent on merchant power sales, and also considers the impacts of continuing weak power markets and recent unscheduled outages.
The rating also considers the relatively modest leverage employed in the project's capital structure, projected cash flow metrics that generally score toward the upper end of the B range in most years, the meaningful reduction in refinancing risk that is expected as a result of the maturity extensions of the credit facilities and the improving fundamentals for power sales in the Electric Reliability Council of Texas market as a result of growing demand and declining reserve margins, Moody's said.
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