Standard& Poor's Ratings Services placed Panda Sherman Power LLC's 'B-' project financerating on CreditWatch negative April 8, just a day after taking the same actionon Panda Temple Power LLC's project finance rating of 'B.'
The holding companiesrepresent the name sake PandaSherman and PandaTemple natural gas facilities in Texas.
S&Psaid that ongoing challengesfor merchant generators in the ElectricReliability Council of Texas Inc. or ERCOT market has been the maindriver behind the projects' inability to meet their covenants and ability to commandpower prices in line with the agency's expectations.
"Wehad anticipated that 2015 would be a weak year for generators in the ERCOT marketanyway due to oversupply in the market and weaker than previously expected growthin demand. However, we now anticipate that these conditions will persist duringthe coming years, especially with ERCOT recently opining that reserve margins couldgrow to over 20% during that time," the rating agency noted.