Research Update: Invenergy Thermal Operating I LLC 'BB' Rating Affirmed; Outlook Remains Negative On Power Market Uncertainty

Invenergy Thermal Operating I LLC (Invenergy) recently sold its 330-MW gas-fired power plant in Texas, Ector County Energy Center LLC; the project will use the proceeds to prepay $75 million of its term loan B (TLB), which we view as a credit positive. In addition, we expect power and energy prices in the regions where Invenergy's merchant assets operate will be elevated over the next 12 months, benefitting the project's cash flows and coverage ratios. However, lower-than-expected capacity prices in the Commonwealth Edison Co. (ComEd) zone of the Pennsylvania-Jersey-Maryland Interconnection (PJM) region until 2025 will likely offset some of the strong energy margins of Nelson, Invenergy's biggest cash-flow generator. Furthermore, with the sale of Ector, the project's performance is increasingly

...- Invenergy Thermal Operating I LLC (Invenergy) recently sold its 330-MW gas-fired power plant in Texas, Ector County Energy Center LLC; the project will use the proceeds to prepay $75 million of its term loan B (TLB), which we view as a credit positive. - In addition, we expect power and energy prices in the regions where Invenergy's merchant assets operate will be elevated over the next 12 months, benefitting the project's cash flows and coverage ratios. - However, lower-than-expected capacity prices in the Commonwealth Edison Co. (ComEd) zone of the Pennsylvania-Jersey-Maryland Interconnection (PJM) region until 2025 will likely offset some of the strong energy margins of Nelson, Invenergy's biggest cash-flow generator. - Furthermore, with the sale of Ector, the project's performance is increasingly dependent on Grays Harbor, Invenergy's combined-cycle facility operating in the North West Power Pool (NWPP) region, which faces competition from hydro power generation and exhibits variable...

Research Update