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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

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Related Issuers
Rating Action:

Moody's assigns B2 rating to Star West's new senior secured credit facilities; outlook is stable

27 Jun 2019

Approximately $114.5 million of credit facilities affected

NOTE: On September 19, 2019, the press release was corrected as follows: The following was added to the beginning of the third paragraph of the REGULATORY DISCLOSURES section: “With reference to the withdrawal of the rating of Star West Generation LLC: ” Revised release follows.

NOTE: On September 12, 2019, the press release was corrected as follows: The following sentence was added as the third paragraph of the REGULATORY DISCLOSURES section: “The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.” Revised release follows.

New York, June 27, 2019 -- Moody's Investors Service, ("Moody's") has assigned a B2 rating to Star West Generation LLC's (Star West or Project or Borrower) new senior secured credit facilities, which consists of an approximately $64.5 million term loan B due in September 2020 and a $50 million revolving credit facility also due in September 2020. The outlook is stable.

These new credit facilities replace the previous facilities, also rated B2, which are made up of a $450 million term loan B due in March 2020 (approximately $97.5 million outstanding at 3/31/19) and a $100 million revolving credit facility due in March 2020. The transaction, which extended and reduced the size of the credit facilities, was effectuated through an amendment with Star West's lenders, executed on Friday, June 21. Accordingly, simultaneous with this rating assignment, Moody's will withdraw the B2 rating on the existing facilities.

Star West owns the 570 MW Griffith natural gas-fired, combined cycle power generation plant in Arizona. Star West is a wholly-owned subsidiary of private equity funds managed by Oaktree Capital.

Assignments:

..Issuer: Star West Generation LLC

....Senior Secured Working Capital Facility due 2020, Assigned B2

....Senior Secured Term Loan B due 2020, Assigned B2

Outlook Actions:

..Issuer: Star West Generation LLC

....Outlook, Remains Stable

Withdrawals:

..Issuer: Star West Generation LLC

....Senior Secured Bank Credit Facility, Withdrawn , previously rated B2

RATINGS RATIONALE

The B2 rating assignment for the new senior secured term loan and the revolving credit facility reflects the fact that the amendment, while credit positive because it further reduces leverage by $33 million and pushes out the maturity date by six months, does not alter Star West's fundamental credit profile, owing to its continued exposure to the merchant energy market during most of the remaining term of the financing.

Specifically, the standalone Griffith plant continues to be exposed to merchant cash flows for the rest of 2019 and the first half of 2020, until such time as a new tolling agreement commences in June 2020. As previously reported, Griffith executed a new tolling agreement effective June 2020 with an investment grade, investor-owned utility for its entire 570MWs covering the summer period from June to September each year until 2026. The contract has a capacity payment as well as an adder for variable operating and maintenance costs and start-up charges. While the existence of this contractual arrangement provides substantial value creation and greatly lowers refinancing risk for Star West and the Griffith plant, during the next twelve months, Griffith will operate as a pure merchant generator in the Desert Southwest market, with Star West relying exclusively on Griffith for energy margins that are generated typically during the summer months. If Griffith were to experience a major outage, particularly during the critical summer months when it generates most of its revenues, the Project's cash flows could be stressed, although the deleveraging will help to mitigate the impact. Moody's notes that Griffith has historically had good operational performance. For example, for all of 2018, the availability factor was over 87%, and it was 100% in the critical summer months. For the first five months of 2019, availability was also at 87%.

In addition to the 6-month extension and debt reduction in the term loan B, Star West also reduced the revolving credit size from $100 million to $50 million for working capital and the issuance of letters of credit owing to the issuer's lower working capital needs. Similar to the tenor for the secured term loan, the revolver was also extended to September 30, 2020, from March 13, 2020.

Outlook

The stable outlook reflects the extension of the maturity date and the deleveraging, which will aid refinancing prospects. The stable outlook also acknowledges the existence of a tolling contract with an investment grade utility starting in 2020, which will provide greater cash flow stability and predictability at that time.

What could change the rating up

Because the new toll commences in June 2020, and the Project can only earn energy margins as a merchant plant until then, there is limited potential for upward rating pressure in the short run. That said, upward rating pressure could emerge if merchant power prices were to improve enabling the Project to produce significantly higher cash flows.

What could change the rating down

There could be downward pressure on the rating or outlook if the Griffith plant sustains weaker operational performance leading to the debt service coverage ratio falling below 1.3x and CFO/Debt metrics drops below 5.0%.

Star West Generation LLC owns the 570 MW Griffith natural gas-fired, combined cycle power generation plant in Arizona. Star West is in turn a wholly-owned subsidiary of private equity funds managed by Oaktree Capital.

The principal methodology used in these ratings was Power Generation Projects published in June 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

With reference to the withdrawal of the rating of Star West Generation LLC: The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Richard E. Donner
VP - Senior Credit Officer
Project Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

A.J. Sabatelle
Associate Managing Director
Project Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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