Standard & Poor's has joined Fitch Ratings in lowering its credit rating on an Ameren subsidiary.
S&P cut the rating of Ameren Energy Generating, known as Ameren Genco, Friday to CCC-plus from B. It said the things could get worse for the unit, which operates coal- and gas-fired plants in Illinois for the so-called merchant power market:
The outlook is negative, reflecting our expectation that continued weak power prices will materially weaken the company's cash flow measures and ability to meet its financial commitments.
S&P projects that in the event of a default, bondholders would recover 50 to 70 percent of what they are owed.
Fitch downgraded the Genco unit's bonds on Jan. 28, saying its business was unsustainable. Ameren said Dec. 21 that it no longer considered Genco a core business, an announcement that caused the price of Genco bonds to tumble.
The unit's shortest-term bonds, maturing in 2018, traded Friday for about 60 cents on the dollar.