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AES is reportedly set to write off the entire value of its Argentine investment portfolio, in light of the turmoil plaguing the country's energy markets and broader economy. Market watchers say the assets include AES' 60% stakes in three distribution companies, Eden, and Edes and Edelap, and 3,441 MW of generating capacity. The utilities cover some 700,000 customers. Repeated calls to Kenneth Woodcock, an AES spokesman in Arlington, Va., were not returned.

An Electrabel-led consortium expects to close non-recourse financing for its roughly $1.2 billion acquisition and repowering of the 2.6 GW Interpower portfolio of Italian power plants by the end of the month, says a banker working on the deal. He says the lead arrangers,Barclays Capital, BNP Paribas, Credit Agricole Indosuez and IntesaBci, planned to round out a broad-based senior syndication team late last week, which would enable the group to provide project-level bank debt as soon as the acquisition closes. Françoise Vanthemsche, a spokeswoman at Electrabel in Brussels, declined comment.

Calpine has withdrawn a request to banks for approval to mothball the construction of five partially built plants, a plan that would have saved the IPP $700-800 million in upcoming development costs, according to bankers contacted by the company. Its decision was announced in a brief e-mail to lenders that gave no explanation for the U-turn. However, financiers suggest the San Jose, Calif., company nixed the idea once it realized it wouldn't be able to meet a self-imposed Jan. 10 deadline for bank approval once a number of creditors sought additional information before making a decision. Katharine Potter, a spokeswoman at Calpine, says the company does not publicly discuss its negotiations with its creditors.

Columbus, Ohio-based AEP will seek to raise $1.3 billion in unsecured notes to refinance 10 tranches of debt involving first-mortgage bonds and unsecured notes that will mature at different times during the year, according to Armando Pe–a, senior v.p. and treasurer.

Entergy has walked out on its last remaining U.K. generation asset, Damhead Creek, and handed control of the 800 MW power plant to the junior bank group that financed its construction. The dramatic move likely heralds the first of many such power plant bank takeovers over the next year as embattled generators look to wash their hands of loss-making U.K. power plants, predict market watchers. The collapse in wholesale power prices and slender spark spreads are prompting generators to exit the U.K. market, they explain. "We could see a tidal wave of IPP failures, first in the U.K. and then the U.S.," forecasts Michael Hogan, former executive managing director for Europe and the Middle East at InterGen.

Calpine has withdrawn a request to banks for approval to mothball the construction of five partially built plants, a plan that would have saved the IPP $700-800 million in upcoming development costs, according to bankers contacted by the company. Its decision was announced in a brief e-mail to lenders that gave no explanation for the U-turn. However, financiers suggest the San Jose, Calif., company nixed the idea once it realized it wouldn't be able to meet a self-imposed Jan. 10 deadline for bank approval once a number of creditors sought additional information before making a decision. Catharine Potter, a spokeswoman at Calpine, says the company does not publicly discuss its negotiations with its creditors.

Last year's annus horribilis for the North American power project finance may be topped by even greater misery if bankers' bleak forecasts pan out. Financiers are expecting little if any new deal flow associated with plant construction as sponsors grapple with liquidity issues and also the fact that the construction boom of recent years has resulted in an oversupply of plants across much of the U.S. and tight spark spreads.

The City's power project finance community is set for another tough year as financiers grapple with restructuring the slew of existing U.K. power plant project loans that are either in default or perilously close to doing do. "The name of the game is damage limitation rather than courting new business," says one London-based lender.

The U.S. power sector heads into the jaws of a refinancing wave this year that over the next 36 months could top $90 billion. The bulk of the debt mountain comprises bank loans. In the near-term maturing corporate-level facilities will take center stage, but later this year the market must begin tackling the problem of maturing non-recourse mini-perms. Refinancing mini-perms is going to become an increasingly more important feature of the power sector financing landscape over the next few years.

Illinois Power increased the size of a bond offering on Dec. 20 by $150 million to $550 million as distressed credit and high-yield investors flocked to the utility sector. Karen Anderson, an analyst at Fitch Ratings in Chicago, says, "It's heartening that Illinois Power was able to get it done because it originally tried to launch the deal in July." She explains that it put the deal on hold because it didn't get very good terms in light of downgrades from the rating agencies. The 11 1/2% B3/BBB bonds due in eight years, were priced at 360 basis points over equivalent Treasuries. Officials at Illinois Power referred calls to David Byford, a spokesman at parent company Dynegy, who declined comment.