Constellation Energy (CEG) Plummets on Collateral Concerns

Posted by Tate Dwinnell | # |
09:25:35 pm on August 12, 2008

Constellation Energy (CEG) plummeted to a 2 year low today with record volume after it was revealed that a credit rating downgrade could force the company into posting billions of dollars in extra collateral.  High volatility in fuel and electricity prices have increased the risk of a downgrade, and the company could be forced to post over 3 billion collateral to cover those contracts if its debt is downgraded 3 levels.  It’s important to point out that this hasn’t happened yet, but investors are concerned about that and ongoing concerns about transparency around the company’s cash flows

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