On Nov. 7, 2003, Standard&Poor's Ratings Services assigned its 'B' rating to Calpine Corp.'s planned $400 million second priority senior secured notes and its 'CCC+' rating to the planned $600 million senior unsecured convertible notes. The proceeds will be used to refinance existing debt. The outlook is negative. Calpine is a San Jose, Calif.-based corporation engaged in the development, acquisition, ownership, and operation of power generation facilities. The 'B' corporate credit rating reflects the following risks: Calpine's credit statistics are weak. For example adjusted funds from operations (FFO) interest coverage dropped from 2.2x in 2001 to 1.5x in 2002, significantly below expectations. The deterioration is due to lower power prices on the merchant portfolio and higher levels of
