Spending Cuts Offset Calpine Credit Rating

Calpine Corp., a power-plant developer, won’t need an investment-grade credit rating in the next two years after reducing capital spending, Standard & Poor’s Corp. said.

Calpine this month delayed or canceled $3 billion of power-turbine purchases. In January, it postponed $2 billion of projects. S&P;’s corporate credit rating for Calpine is BB, two notches below investment grade, and probably will stay at that level for about two years, S&P; officials said during a conference call with analysts.

“I think there is much less incentive to obtain an investment-grade rating now than there was before” because Calpine won’t need as much access to the capital markets after trimming spending, S&P;’s Jeffrey Wolinsky said.

Energy companies such as Calpine are delaying projects or selling assets to raise cash and bolster their balance sheets after Enron Corp.’s collapse eroded investor confidence in the industry.

Shares of San Jose-based Calpine fell 22 cents to $12.70 on the New York Stock Exchange.

S&P; on Tuesday lowered Calpine’s unsecured bond rating three levels to B-plus, four notches below investment grade, from BB-plus, the highest junk rating after the company pledged some of its assets to get about $2 billion in bank credit. Calpine’s outlook is stable, the rating agency said.