Downgrade Pushes Dynegy Closer to the Brink

Dynegy's (DYN Quote) chances of avoiding bankruptcy appear to be fading.

Following a downgrade by Moody's, Dynegy is now saddled with a C-level credit rating that warns of likely default. Moody's cited concerns about Dynegy's ability to refinance $1.6 billion of bank debt, maturing over the next six months, when it downgraded the company's credit late Monday. Although Dynegy's senior debt is still clinging to B-level junk ratings, the debt of its primary operating subsidiary has officially slipped to Caa2.

Even after the downgrades, the outlook for Dynegy's credit remains negative. ...