DBRS Confirms Brookfield Renewable Energy Partners L.P. at BBB (high), Trend Stable

DBRS has today confirmed the Issuer Rating of Brookfield Renewable Energy Partners L.P. (BREP or the Company) and the rating of the Senior Unsecured Debentures and Notes (the Notes) of BRP Finance ULC at BBB (high) with Stable trends. The Notes are guaranteed by BREP. The ratings reflect the strength of BREP’s high-quality, long-life and cost-competitive renewable power assets with reasonable geographic diversification and contract protection. Despite short-term volatility or cyclicality of hydrology and power prices, the long-term prospects for the Company’s environment-friendly and carbon-free renewable energy assets remain favourable, given continuing trends of rising energy demand and volatile global fuel supply, as well as increasing sensitivity toward environmental and climate-change issues. The Company (as with preceding entities) has been able to proactively manage short-term uncertainties and variations in hydrology and power prices, by maintaining sufficient liquidity and continually seeking diversification and additional contract protection to limit the impact of potential downturns.

In addition to hydrology and energy market risk, the rating is constrained by the structural subordination of the corporate-level borrowings to asset-level debt. The key credit metrics (all DBRS estimates) supporting the rating profile are largely based on BREP from a non-consolidated perspective. BREP has stated that its capital management objective is to maintain an investment-grade credit rating with prudent use of leverage to ensure access to incremental borrowings for new growth initiatives. DBRS expects future material acquisitions or new construction to be permanently funded with a mix of internal cash flow, non-recourse project-level debt and/or equity. To maintain a solid credit profile in the current rating category, the Company will need to maintain a financing strategy that is suitable and appropriate for the variable nature of its renewable energy business and cash flow. Cash flow growth with contributions from newly built or purchased assets would need to, in time, achieve sufficient levels to keep cash flow-to-interest coverage within a range that is acceptable for the current rating category.

BREP is a result of the combination of the power generation assets and operations of Brookfield Renewable Power Inc. and Brookfield Renewable Power Fund in November 2011. Please refer to DBRS’s press releases dated September 13, 2011, and November 28, 2011, for more information.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Companies in the Non-Regulated Electric Generation Industry (May 2011), which can be found on our website under Methodologies.