The rating on Covanta Holding Corp,'s $460 million cash convertible senior unsecured notes due 2014 and $374 million senior unsecured convertible debentures due 2027 is 'B'. The recovery rating on all senior unsecured debt at Covanta Holding is '6', indicating the expectation for negligible recovery (0%-10%) of principal if a payment default occurs. The outlook is positive. The credit ratings on Covanta Holding reflect its reliance on residual distributions from its wholly owned subsidiary Covanta Energy Corp. (Covanta) and we base the ratings on the consolidation of the two entities. In turn, Covanta is dependent on distributions from project investments and its limited financial flexibility as it pursues its growth strategy given the capital-intensive nature of its business. Although Covanta
