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

DBRS has today confirmed the ratings of Brookfield Renewable Energy Partners L.P. (BREP or the Company) and its related security instruments, including the Company-guaranteed Senior Unsecured Debentures and Notes at BBB (high) and Class A Preference Shares, Series 1 at Pfd-3 (high). All trends are Stable. The ratings reflect BREP’s lower-risk renewable generation mix supported by a high level of long-term contracted output, geographical diversification and operating efficiency. Constraints on the ratings include earnings and cash flow volatility resulting from fluctuation in hydrology and wind resources, high dividend payout ratios despite continued high growth-capital spending, and structural subordination to project-level debt. DBRS expects BREP to fund any material acquisition in the future and refinance maturing project debt with non-recourse project-level debt and equity to maintain a reasonable financial profile for the assigned rating category.

The credit metrics of BREP are within range for the current rating profile. Operating cash flow remains well in excess of maintenance capital expenditure requirements. However, significant growth capex and dividends have resulted in free cash flow deficits, which have been funded with a reasonable mix of debt and equity. As a result, leverage has remained relatively stable.

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

The Senior Unsecured Debentures and Notes of BRP Finance ULC and the Class A Preference Shares of Brookfield Renewable Power Preferred Equity Inc. are guaranteed by Brookfield Renewable Energy Partners L.P.