DBRS Confirms AltaLink Investments, L.P. at BBB, Stable Trend

DBRS has today confirmed the rating of AltaLink Investments, L.P.’s (AILP or HoldCo) Senior Unsecured Bonds at BBB. The rating confirmation is supported by the strong credit quality of its wholly-owned operating subsidiary AltaLink, L.P. (ALP or OpCo; rated “A”), which is largely driven by its low-risk regulated transmission business, supportive regulatory environment in Alberta and adequate financial profile. OpCo’s regulated transmission business in Alberta accounts for 100% of total earnings and assets.

HoldCo’s BBB Senior Unsecured Bonds rating is notched downward from OpCo’s rating to reflect the following: (1) structural subordination of the parent relative to the operating company; (2) high degree of leverage at the HoldCo level; and (3) reliance on a single operating subsidiary for cash distributions.

HoldCo’s non-consolidated leverage remains relatively high (debt-to-capital of 36% as at March 31, 2012). EBITDA interest and cash flow ratios remain acceptable for the rating category and are expected to be stable in the near to medium term as OpCo enters a period of accelerated capital expenditures.

Note:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Companies in the North American Energy Utilities (Electric and Natural Gas) Industry, which can be found on our website under Methodologies.