Reliant Resources’ Rating Cut to Junk
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Reliant Resources Inc.’s credit ratings were cut three levels to junk by Moody’s Investors Service Inc. amid concern the energy trader’s cash flow will decline with wholesale power sales. The shares fell as much as 23%.
Senior unsecured debt for Reliant Resources, a publicly traded unit of Texas power producer Reliant Energy Inc., was cut to Ba3 from Baa3, the lowest investment-grade rating, Moody’s said.
Unsecured debt for Reliant Energy, which owns 83% of Reliant Resources, was cut one level to Baa2.
Reliant Resources is trying to refinance $4.2 billion in loans. The company has admitted trades in electricity and natural gas that inflated revenue by $7.9 billion over three years.
Shares of Reliant Resources fell $1.08 to $4.62 in NYSE trading, after touching $4.37. Reliant Energy, which plans to spin off Reliant Resources this year, fell 48 cents to $10.06.
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