On Oct. 17, 2002, Standard&Poor's Ratings Services changed its outlook on Calpine Corp. to negative from stable. The change in outlook is due to erosion in the capital and bank markets for refinancings and Calpine's pending $5.5 billion refinancing requirement over the next two years. Recently, investment-grade and speculative-grade companies in the energy sector have encountered difficulties in refinancing bank loans and other maturities coming due; credit spreads have dramatically increased and banks are also requiring cash sweeps and prepayment provisions. The current investment climate foreshadows a difficult refinancing for Calpine's coming maturities, and Calpine has insufficient cash flow to retire the debt with internal cash flow. Additionally, the refinanced debt may be at higher interest rates, which
