PT - JOURNAL ARTICLE AU - Robert Johnson TI - The Importance of Being Economic AID - 10.3905/jsf.1999.320219 DP - 1999 Oct 31 TA - The Journal of Structured Finance PG - 27--39 VI - 5 IP - 3 4099 - https://pm-research.com/content/5/3/27.short 4100 - https://pm-research.com/content/5/3/27.full AB - A merchant plant is a generator that sells its energy and capacity into an open market and as a result is exposed to fluctuations in sales volumes and prices. Merchant plant credit analysis is an evolution of the fundamental analysis that Moody's has long undertaken when rating electric utilities and independent power projects (IPPs). The agency believes that the ratings of a merchant plant will be lower than that of a traditional single-asset IPP with the same capital structure and cash flow coverage of interest because of the greater volatility of its cash flows. The appropriate analytical beginning is to determine a creditable market forecast and to assess a project's break-even position relative to the market forecast.