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AES Red Oak LLC Jan 10
Standard & Poors, Jan 2010
Abstract
The ratings on power provider AES Red Oak LLC reflect historically low debt service coverage and a merchant tail in the last eight years of the bond term. An improving dispatch profile and availability factors that have resulted in stronger debt service coverage in the past two years mitigate those weaknesses. A 20-year power purchase agreement (PPA) also mitigates market exposure through about 2020. Without this PPA, the project would operate under merchant conditions and may be unable to service its obligations at the current debt level. However, we expect project debt to drop to manageable levels for merchant operations by the time the PPA expires. While an improving debt service coverage could improve ratings, we would constrain the rating...
Companies mentioned in this report are: AES Red Oak LLC,AES Corp. (The)
Action: Review
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Full Analysis
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