Research Update: Calpine Corp. ?B+? Ratings Affirmed; Outlook Revised To Positive On Substantial And Ongoing Deleveraging

Calpine Corp. (Calpine) has announced a $1.75 billion project debt financing of its Geyser Power Co. LLC assets (The Geysers), a 725 MW geothermal portfolio that was until now without leverage. We expect that Calpine will use the proceeds for deleveraging at the corporate level, which we estimate at about $1.35 billion. This is in addition to the $2.5 billion of debt eliminated since 2017. We have affirmed our 'B+' issuer credit ratings on Calpine. We are also revising our ratings outlook to positive from stable to reflect the significant deleveraging since 2017 and the anticipated incremental corporate deleveraging that we think will improve Calpine's adjusted debt to EBITDA to less than 5x. A higher rating on Calpine, however, will

...- Calpine Corp. (Calpine) has announced a $1.75 billion project debt financing of its Geyser Power Co. LLC assets (The Geysers), a 725 MW geothermal portfolio that was until now without leverage. - We expect that Calpine will use the proceeds for deleveraging at the corporate level, which we estimate at about $1.35 billion. This is in addition to the $2.5 billion of debt eliminated since 2017. - We have affirmed our 'B+' issuer credit ratings on Calpine. - We are also revising our ratings outlook to positive from stable to reflect the significant deleveraging since 2017 and the anticipated incremental corporate deleveraging that we think will improve Calpine's adjusted debt to EBITDA to less than 5x. A higher rating on Calpine, however, will depend on its financial sponsor's willingness to keep and sustain adjusted debt to EBITDA in at around 4.5x....

Research Update