S&P reduces rating for CA projects to "JUNK" status

Reuters ^ | 8/7/2002

[SierraWasp]

Here's the link:poke this!

Somebody please post this as I always screw it up.

[SierraWasp]

What's the deal here? I need some perceptions and opinions on this! Is So. Cal Edison gonna go down after all? Is GANG-GREEN gonna get Davis to buy SCE cheaper after it's bankrupt so's they can keep us humans offa the huge properties of SCE in the end?

[SierraWasp]

One Pingy Dingy, Two Pingy Dingy...

[Nuke'm Glowing]

But, But, But, how will they ever re-charge their electric cars?????

[SierraWasp]

"But, But, But, how will they ever re-charge their electric cars?????"

Why... That's Easy!!! They'll hook yer screen name up to the grid, right???

[A CA Guy]

We should radiate Davis and use him for energy. For the first time he could become useful! LOL

[Nuke'm Glowing]

Congrats to all you Commiefornians. You now have a state with a junk governor, junk utilities, junk mayors, and Hollyweird. I'm so relieved all we have here in FL is Janet Reno's dance party and the occassional hurricane. Makes me feel better about our problems.

[Carry_Okie]

Hi Waspersin,

I'm in Utah right now. It's saner here (at least most of it).

Maybe Bray Dayfist wants to offer Bill Simon a good deal on some bonds?

[Neanderthal]

Reuters thinks that the word "impact" is a verb. It's really annoying to try to read an article written by an illiterate.

[cinFLA]

Reuters thinks that the word "impact" is a verb. It's really annoying to try to read an article written by an illiterate.

im-pact

v.t. 5) to drive or press closely or firmly into simething; pack in.

6) to fill up; congest; throng

7) to collide with; strike forcefully

v.i. 8) to have impact or make contact forefully

[Grampa Dave]

Wednesday August 7, 6:06 pm Eastern Time, Reuters Company News

S&P cuts California power projects to junk status



LOS ANGELES, Aug 7 (Reuters) - Standard & Poor's on Wednesday cut the ratings of some power projects that supply Southern California Edison to "junk" status, citing uncertainty about the utility's own longer-term credit standing.

The rating agency noted improvements in the credit strength of the Rosemead, California-based utility, a unit of Edison International (NYSE:EIX - News), but said it was "still impossible to determine SCE's long-term credit-worthiness."

SCE, which a year ago was on the brink of bankruptcy, is currently rated BB by Standard and Poor's, a non-investment or junk rating. The projects were cut to BB from BBB-minus, the lowest investment grade.

"The projects really derive their credit from SCE," Standard and Poor's analyst Peter Rigby told Reuters, noting they rely heavily on the utility for capacity payments.

In March, Standard and Poor's raised the utility's corporate credit rating to BB from D after it paid $4.8 billion to creditors, clearing much of the debt it incurred at the height of the state's power crisis last year.

The downgrade impacted Edison Mission Energy Funding Corp., a finance vehicle for Edison Mission Energy's Big Four co-generation projects in California.

Edison Mission Energy (EME) is a merchant power plant owning unit of Edison International. The cut did not impact EME's main rating, which remained low investment grade.

"Edison Mission Energy Funding is an entity down the family tree from Edison Mission Energy. It is a one project company and nothing is triggered here by a drop to BB," Edison International Chief Financial Officer Ted Craver told Reuters.

Such a move could trigger the accelerated repayments of some company debt and force the company to post collateral on some trading positions.

Edison Mission Energy itself, however, continues to be rated BBB-minus, the lowest investment grade, S&P said.

In March, Standard and Poor's raised SCE's corporate credit rating to BB from D after it paid $4.8 billion to creditors, clearing much of the debt it incurred at the height of the state's power crisis last year.

OTHER PROJECTS CUT

Other projects that saw their ratings cut on Wednesday were Salton Sea Financing Corp. and FPL Energy Caithness Funding Corp., both of which supply power to SCE but are otherwise unaffiliated with Edison International.

Standard and Poor's noted in its statement that a deal struck between SCE and state regulators "removes the immediate but not the long-term threat of a bankruptcy filing."

The pact allows the utility to collect $3.6 billion in past power purchases costs from customers. It was initially forbidden from fully passing on those costs due to a price freeze imposed under California's power deregulation.

The company said earlier that as of June 30 it had collected $2.0 billion of the $3.6 billion.

Craver said Standard and Poor's concerns appeared related to the absence of clear rules about how the utility will recover its power purchase costs in the future.

"They are not as concerned about past under-recovery and more focused on the utility getting good rules relating to (future) procurement," he said.

The California Department of Water Resources currently buys power for the state's three investor owned utilities after skyrocketing prices in 2000 and early 2001 resulted in the state's largest utility, PG&E Corp. (NYSE:PCG - News) unit Pacific Gas & Electric filing for Chapter 11 bankruptcy protection.

California wants its utilities to resume buying power for their customers when they regain credit-worthiness. The rules under which that would happen, however, are not yet agreed.

Craver said that if Calif. Gov. Gray Davis signs Assembly Bill 57, which has been passed by state lawmakers, "it would be constructive from a credit standpoint."

The bill deals with the rules under which the utilities would return to buying power. A key feature is the elimination of "after-the-fact" reasonableness reviews and mechanisms that seek to ensure the "timely" recovery of utility costs through customer rates.

Edison International shares closed up 12 cents or one percent at $11.90 on the New York Stock Exchange on Wednesday.

[Grampa Dave]

I'm waiting for S&P to rate all Kalifornia Bonds to pay for Electricity used by whining and free loading socialists/communists last year as a Zulu ranking or a Zero. Of course those whining and free loading socialists/communists are the bulk of the sheeple who vote for the Rats in every Kali election at least twice.

Then, the most crooked Rat in politics today will force his pet lap dog, Cal Pers to buy up these bonds.

Notice we haven't heard a single word about these upcoming porking junkers in weeks.

The un noticed kiss of death for bad bonds either Edison or Kali came out last month. These are the 4 efunds of bonds that are sold on the stock exchange like stocks. (SHY, ITF, TLT and LQD by Goldman Sachs, the latter for the top corporate bonds. If you ain't in LQD, your bonds be junk.

With all that has happened on Wall Street re exposure of Rat practices and Arthur Andersen accounting, these funds represent the beginning of the end of the Wizards of Oz, the bond guys, playing games behind the screen with funds. Transparency instead of the bond mumble jumble will start to take over. The mumble jumble artists will go to jail and help clean Martha's pans and pots if they try to present an Edison bond or a Kali bond as a good deal in the new market.

[Ernest_at_the_Beach]

Way to go Davis!

calgov2002:

calgov2002: for old calgov2002 articles. 

calgov2002: for new calgov2002 articles. 

Other Bump Lists at: Free Republic Bump List Register

[snopercod]

The mumble jumble artists will go to jail and help clean Martha's pans and pots if they try to present an Edison bond or a Kali bond as a good deal in the new market.

LOL! The only bonds these people will be buying will be bail bonds!

The irony is sweet here. Thanks to the "recession", power prices are down or flat in the rest of the US. But California will be paying premium prices for the next twenty years.

I haven't heard anything on the Kali bonds since the beginning of July.

[d14truth]

"The mumble jumble artists will go to jail and help clean Martha's pans and pots if they try to present an Edison bond or a Kali bond as a good deal in the new market."

IMHO, Martha's a 'saint' compared to Hillary, but apparently not 'anointed'. Some 'insiders' get all the breaks.

[d14truth]

Using nouns as adjectives--

'GRAVE' Davis buries California.

[Grampa Dave]

I like this:

'GRAVE' Davis buries California.

[LS]

This actually may not be good news. When Michael Milken got ahold of it, MCI had "junk" status and several Argintinian bonds had "AAA" status. The term is meaningless, as the market usually heavily weights itself to EXISTING companies as opposed to dynamic start-ups. But in CA's case, the rating is probably accurate.

[Robert357]

What I found interesting about the S&P story is that it implies that California government (CPUC and DWR) are not going to allow SC&E the kind of cash flow it needs to remain out of bankruptcy. That is that DWR buying on behalf of SCE, the Cal ISO in running the power system, and the CPUC in setting or should I say capping SCE rates are going to keep squeezing SCE so that the financial health of that company remains in question.

My feeling is that this is an election year, and that there is no way that Davis, wants to make electric power rates a campaign issue. PG&E has gone into bankruptcy and the lights have remained on in San Francisco, so the feal of bleeding to death another utility is not too frightening to the governmental wonks in Davis employ. That also means that all the power projects that PG&E and SCE have contracts to and those contracts were used to back up financing are now in question. Perhaps this is an attempt at a "grab" of those resources to sign new deals with the new state power authority that Freeman may or may not head. (p.s. kind of interesting that we haven't heard much in the past few days about him or about his legislative confirmation hearings--I guess the first blasts by Dunn sort of delayed a lot of things.)

[Robert357]

I am not sure that "way to go Davis" is the right response. I am sure you were being sarcastic.

However, this is a clear "shot across the bow" by Wall Street to State Regulators to explain what the hell California's Energy policy looks like and who is going to pay for what.

I might add that in rules of naval engagement only one warning shot is given. I would not want to own stock in SCE right now, nor in any company that is a major supplier to or lender to SCE.

[SierraWasp]

"Perhaps this is an attempt at a "grab" of those resources to sign new deals with the new state power authority that Freeman may or may not head."

Excellent prognosication! I'm intensely suspicious, due in large part to a certain "consultant" to the CPUC namely Tim Duane, a Berkeley Urban Planning professor who grew up in Grass Valley that's fanatically anti ANY development and anti ANY private sector economic progress!

He is a burgeoning socialist/commonist, and he has adherents in the previous administration, namely Doug Wheeler Secty of Resources and even more so in the Davis Administration who like his charismatic dreams of Ecotopia. He needs to be watched like a hawk. (or a spotted owl)