OREANDA-NEWS. S&P Global Ratings said today that it lowered its issue-level ratings on Empire Generating Co LLC's $430 million senior secured term loan B facility due 2021, $30 million term loan C due 2021, and $20 million revolving credit facility due 2019 to 'B' from 'B+'. The outlook is stable.

We revised our recovery ratings on all debt to '3' from '2', indicating meaningful recovery of 50% to 70% (lower end of the range) based on a discounted cash flow analysis and debt outstanding in our simulated default scenario.

"The downgrade on Empire is driven mainly by ongoing weak market conditions in NYISO and the delay in the Constitution Pipeline," said S&P Global Ratings credit analyst Kimberly Yarborough.

The stable outlook reflects our view that the project will be able to meet our expectations for operational and financial performance. Under our base case, we expect that operational performance will be strong and that power prices and NYISO capacity prices will not drop considerably from our assumption in the next two to three years. However, factors that could lead to lower revenues include operational outages, a lower than expected capacity factor, or lower than expected power prices. We forecast DSCRs to remain between 1.2x–1.3x on a consistent basis and debt at refinancing of about $600/kw.