Drax's £100m debt rating request

Jun 24 2009 by Graeme Brown, Birmingham Post

The owner of Europe’s largest coal-fired power station have asked investors for £100 million in order to preserve its investment grade debt rating.

Drax, which produces seven per cent of the UK’s electricity at its Selby plant in North Yorkshire, described the share placing as sensible and prudent after ratings agency Standard & Poor’s downgraded its view of the company’s debt.

Its senior debt was marked down from BBB to BBB-, one notch above junk status, after S&P forecast a material weakening in Drax’s earnings this year due to the recession and its negative impact on wholesale power prices. Chief executive Dorothy Thompson said: “This action is a prudent and measured response to specific factors existing in our market at this time, which is at the low point of the cycle.”