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S&P upgrades Vistra Energy, Dynegy

S&P Global Ratings on May 16 upgraded its corporate credit ratings on Vistra Energy Corp. to BB from BB- and on Dynegy Inc. to BB from B+.

The rating upgrade on Vistra Energy reflects an improvement on its business risk profile to "fair" from "weak" following the completion of its acquisition of Dynegy. S&P has a stable outlook on Vistra's corporate credit rating.

"The combination of the two companies diversifies Vistra's EBITDA contribution from different fuel sources so that it can now better leverage expansion in market heat rates (through its base-load generation) or expansion in peak price events (through its gas-fired generation)," said S&P.

Meanwhile, the rating agency noted that its upgrade on Dynegy reflects the company's core status within Vistra Energy. "[W]e believe that Dynegy is now integral to Vistra and anticipate that the company will not likely divest the firm considering management's joint strategy for the business," S&P added.

Aside from the corporate credit ratings, S&P raised its issue-level ratings on Vistra Operations Co. LLC's $3.8 billion senior secured term loan Bs and $500 million term loan C to BBB- from B+, and on Dynegy's secured debt to BBB- from BB and unsecured debt to BB from B+.

Moreover, S&P assigned a BBB- rating to Vistra Operations' new $2.05 billion term loan B-3 and removed Dynegy's ratings from CreditWatch with positive implications.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here and here.