The bank debt for Boston Generating has powered up to 138-142, more than double the price offered a year ago. A trader said changes in the way power producers in New England are paid is boosting the levels. The name shot up from 116-120 to 127-130 last month, after the Federal Regulatory Energy Commission approved The New England Locational Installed Capacity (LICAP) proposal.
This removes uniform capacity payments and instead varies pricing based on demand from a specific region. This will be a boost to generators in New England, where there are regions short on power. The trader noted that another call was held last week explaining that the LICAP payments would go through.
In 2000, Boston Generating, a subsidiary of Exelon Corp., entered into a $1.25 billion non-recourse credit line to back the construction of plants known as Mystic 8, 9 and Fore River.
The project was not completed on time, leading to an event of default and last July the assets were transferred to the lenders. Since then the debt has climbed from the high 70s with ownership moving from the original BNP-Paribas-led creditor group to a group of 44 hedge funds.
These include Citadel Investments, Cargill Financial Markets, Farallon Capital Management, GLG Partners, John A Levin & Co. and Longacre Management (LMW, 5/20). The hedge funds are now looking to refinance the loans and have held discussions with Credit Suisse First Boston.
