Talen Energy affirmed by S&P Global Ratings at B- after adding secured debt

Talen Energy Supply LLC was affirmed today by S&P Global Ratings at B- and a stable outlook after the company borrowed $848 million through a new first-lien credit facility that matures in September 2024. The agency assigned a B rating to the new facility, downgraded the outstanding first-lien debt to B from B+ and affirmed the company's guaranteed senior unsecured notes at CCC.

S&P Global Ratings said the new secured debt, which was fully drawn and is pari passu with outstanding secured debt, enhanced liquidity but "lowers our overall recovery expectations for Talen in a default scenario." Ratings added that it projects that the company will generate positive free operating cash flow in 2022 and 2023 and expects its liquidity to remain "adequate" during that period.

Talen's 10.5% guaranteed notes due January 2026 traded today at 46.5, while the company's 7.625% senior secured notes due 2028 were quoted at 89.5, after hitting a six-week high of about 93.625 on Jan. 14.

Talen is an independent power producer with roughly 13 GW of generating capacity.