Who's afraid of the subprime wolf? Not Dynegy …

…. or other power companies. As Standard & Poor’s says in a new report:

The U.S. power sector’s fundamentals have improved sufficiently during the past several years so that most, if not all, companies should be able to refinance pending maturities despite the credit markets’ current unsettled nature ….

This isn’t just the big, conservative utilities, but the independent power generators, too:

With respect to speculative-grade companies, especially merchant generators, Standard & Poor’s believes that risks associated with near-term refinancing requirements are manageable given ample sources of liquidity and absence of near-term maturities.

But the fall-out from the subprime home mortgage crash means the good times are over, said Standard & Poor’s credit analyst Aneesh Prabhu. Lenders are no longer willing to sacrifice traditional financial maintenance and other covenants.

No worries: Dynegy’s Bruce Williamson isn’t sweating subprime.

Dynegy CEO Bruce Williamson told Reuters recently the Houston-based power company isn’t worried.
“We’re in very good shape,” Williamson said, adding that Dynegy in May had completed a $1.65 billion senior unsecured bond offering and increased its senior secured credit facility by $750 million, providing it with strong liquidity.
This may even the field when Dynegy bids for power assets against private equity investors, who use debt to leverage their returns, Williamson said.
Today Dynegy said it has completed a $1 billion construction financing fro the Sandy Creek Power Generation Facility in McLennan County, a 900 megawatt coal fired plant it is developing with LS Power.

Project financing, which is non-recourse to Dynegy and LS Power Group, includes an $800 million construction loan that will be drawn as required and a fully drawn $200 million term loan. The senior secured loans will mature on August 30, 2015. Pricing for the facilities is LIBOR plus 250 basis points during the construction phase and LIBOR plus 200 basis points during the three-year term following the construction phase. The $1 billion of Sandy Creek Energy Associates, L.P. debt has been rated BB- by Standard & Poor’s and Ba3 by Moody’s.

Sandy Creek is expected to start operation in 2012.