Moody's cuts Calpine to junk status
NEW YORK, Dec 14 (Reuters) - Moody's Investors Service cut Calpine Corp.'s (NYSE:CPN - news) credit ratings to junk status late on Friday, and warned it may cut them again pending the power producer's success in obtaining additional financing.
The rating agency cut San Jose, California-based Calpine's senior unsecured debt, and the debt of several Calpine affiliates, one notch to ``Ba1,'' its highest junk grade, from ``Baa3.'' Its rating actions affect $11.6 billion of debt.
Independent power producers are suffering from a contagion resulting from Enron Corp.'s (NYSE:ENE - news) bankruptcy, and some investors are likening parts of Calpine's business to Enron's.
Moody's acknowledged the market's treatment of Calpine was a factor in its Friday downgrade, saying Calpine has ``acquired a significant debt burden'' and that ``the company's financial flexibility has been reduced as evidenced by investors' materially lowered earnings expectations and the company's resulting fallen stock price.''
Moody's cuts came one day after the rating agency, which raised Calpine to investment-grade status in October, warned a downgrade could be in the offering. That announcement prompted a nearly 18 percent slide Friday in Calpine's shares.
Calpine shares closed on the New York Stock Exchange at $13.20, down $2.85, and down 38 percent this week. They fell to $12.70 in after-hours trading after the Moody's downgrade, which came after U.S. stock markets closed. |
