I have some reservations on this one.Firstly, the hang on by the...

I have some reservations on this one.

Firstly, the hang on by the fingernails scenario has three problematic points

1. The Debt Investment grade rating due for refresh in June 09. Hard to see how this will be better than neutral. This is a debt sizing (read - pay down) event.

2. Introduction of CPRS. Big issue for Flinders (particulalry) other assets are neutral given gas mix of portfolio. Again, CPRS adverse to position assumed by banks in mid 08 is a resizing event.

3. Continuing sooftness in power markets. Power generators continue (so far) to preform well above historic GOC availability and cost levels, keeping power prices lower than is helpful to BBP. This reduces cash generation (forgve the pun).

On the Origin/AGL takeout. Origin could use the assets but (IMO) are conserving cash until CSG project delivery is clearer. Given the possibility of purchase of NSW capacity credits (if NSW could EVER get its commercial act together and reform this sector). These would take Origin and to a lesser extent AGL over their target coal % of generation, reducing their appetite for Flinders specifically and BBP generally.

There is also no compelling strategic case for AGL to buy, albeit IMO a mild tactical case.

As well, ACCC would have a (perhaps inapproprite) views about what OE and AGL could buy. AGL pushed against ACCC in the LoyYangA case, but did not take full (IMO any) advantage of that decision. It is therefore weaked in the next debate.

Sorry, until we see the June Debt Rating and CPRS impact, BBP (IMO) is in limbo.