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The power market hasn't seen the flood of merchant plant sales at distressed prices that some were predicting and several speakers said it's unlikely to happen at all. Banks that control these assets after sponsors hand back the keys are faced with either selling at fire-sale prices, or holding the assets over the longer-term to allow for price recovery. "It's not a very tough choice," said Jay Worenklein, outgoing global head of project finance at Société Générale

InterGen is looking to tap the project finance loan market to fund the completion of Mountainview Power, a partially constructed 1,056 MW gas-fired combined-cycle plant in California it bought from AES late last month. David Fatzinger, a project manager at InterGen in Burlington, Mass., says the company is discussing the deal with potential lenders, but has yet to mandate any banks to lead the financing. He declined to name prospective lenders or reveal how much money InterGen is looking to raise, but says InterGen hopes to ink financing this summer prior to recommencing construction.

Some 450 power company executives, financiers and consultants turned out for Platts' 18th Annual Global Power Markets Conferencein New Orleans, the top schmooze-fest on the industry calendar. Against a backdrop of widespread depression in the sector, attendees focused on a array of financing issues and also pointed to a less bleak future. Senior Reporter Peter Thompsonfiled the following stories.

The recent successful conclusion of loan restructuring talks between several embattled power companies and their lenders suggest that bleak forecasts predicting a swathe of power sector Chapter 11 filings may be wide of the mark. "We may see less bankruptcies than expected," said John Diaz, managing director at Moody's Investors Service, who admitted that he had expected more bankruptcy filings by now. He explained banks seem reluctant to push power companies into bankruptcy because they don't want to end up running assets. He adds that new sources of financing from the institutional investor market also have played an important role.

The U.S. project finance bond market could come back to life in the next few months, outstripping activity in the non-recourse loan market when it comes to the financing and refinancing of power plants, argued a senior project financier. "Capital is available for well structured projects but it's not going to come from the banks," noted Steve Greenwald, head of the global project finance group at Credit Suisse First Boston. He told the conference that CSFB has around $3 billion of project deals in the pipeline that could reach the market over the next three months.

PSEG Energy Resources & Trade has hired Rogers Herndon, managing director, global derivatives-power at Bank of America in New York, as managing director-power and natural gas trading. Steve Teitelman, president of the wholesale trading and marketing operation of PSEG in Newark, N.J., says Herndon was the cream of the crop of candidates who applied for the position, which was vacated several months ago by Jeffrey Foose. Herndon, who starts today, could not be reached for comment.

* Attendee numbers at the official conference were down this year, but as ever the true turnout in New Orleans was difficult to gauge. Many bankers descend on the city, dubbed Planet Hangover by David Letterman for the social scene and skip the conference altogether. "The business doesn't get done there [at the formal conference]," according to one official at DZ Bank's packed Monday soiree at New Orlean's institution Antoine's.

Steag Power, an independent power generation affiliate of Essen, Germany-based Steag, is seeking non-recourse bank debt financing to partly fund the development of a $1.5 billion 1,500 MW coal-fired plant in northwest New Mexico. A company official says Steag has yet to retain a financial advisor to lead the financing. He adds the IPP is also seeking a partner to part fund the equity contribution for the greenfield development.

Reliant Resources' ability to clinch a four-year restructuring of $5.9 billion in loans last week at base pricing of LIBOR plus 400 basis points should give a fillip to the next set of troubled power players facing refinancing talks, according to market officials. "Reliant is getting money rolled over cheaper than they paid for new money," says one lender, noting the disparity between the $5.9 billion and the small slug of $300 million in a new loan that priced at 550 basis points over LIBOR.

Project bankers weighing up taking sub-underwriting slots funding AES' 1.2 GW Energia Cartagena project in Spain are pushing the U.S. developer to scale back leverage. The EUR500 million deal is being structured with a 90:10 debt-to-equity ratio, but some lenders want to see equity doubled before they ink their names to the deal. They explain that credit concerns plaguing AES and its perceived willingness to walk out on ailing plants (such as Fifoots Point in the U.K.) make them unwilling to take on a highly geared AES project.