Moody's cut the debt rating of independent power producer
, including the rating on its senior unsecured debt to "B1" from "Ba1."
The ratings outlook is negative based on continued liquidity concerns, Moody's said. About $12.4 billion of long-term debt instruments are affected.
"The downgrades reflect Calpine's high leverage, limited financial flexibility, substantial ongoing capital expenditure requirements to complete its reduced build out program, and concerns about the company's liquidity profile," Moody's said in a statement.
"Calpine's debt is expected to grow over the course of the coming year in connection with the continued development of committed projects. Although Calpine's total megawatt sales will increase this year as the company completes additional plants, net cash provided by operating activities is expected to remain very low," Moody's said, adding that the San Jose, Calif.-based company's exposure to price swings will increase as the company increasingly relies on merchant sales.