Leads Goldman Sachs and Morgan Stanley launched the $950 million financing package for the Astoria assets last week with pricing at around LIBOR plus 225 for the first tranche of debt and LIBOR plus 450 proposed for the second tranche. The credit bankrolls Madison Dearborn and US Power Generating's winning bid to acquire generating assets from Reliant Resources for $975 million (PFR, 10/3). Calls to David Mosher, managing director at Madison Dearborn in Chicago and Jacob Worenklein, head of US Power Gen in New York, were not returned.

Observers say about 80 strong queued up to take pieces of the loan. As a result, pricing could be flexed down, specifically on the second tranche, as the transaction gets closer to completion, say officials close to the deal. Calls to bankers at Goldman and Morgan were not returned.

Arleen Spangler, analyst at S&P in New York, says the package is similar to what the rating agency has seen in the past. She notes one of the determining factors in the rating was the unique New York City market which necessitates factoring in the capacity market and the uncertainty of prices. Bolstering the deal is a Morgan Stanley capacity contract that locks in capacity revenues for the first three years for about 50% of net revenues.

S&P rates the first tranche BB- and the second tranche received a B rating. The loan consists of a $430 million term loan B, a $100 million working capital facility and a $120 million synthetic letter of credit. A $300 million term loan C makes up the second tranche.