DBRS Comments on BREP’s Acquisition of the Remaining Interest in Safe Harbor

DBRS notes today that Brookfield Renewable Energy Partners L.P.’s (BREP or the Company; rated BBB (high) with a Stable trend) acquisition of the remaining 67% interest in the Safe Harbor hydroelectric facility (the Acquisition) is not expected to have a material impact on its current credit rating. DBRS expects BREP to finance the acquisition prudently and maintain its deconsolidated debt-to-capital ratio below 20%.

As stated in our previous press release (see “DBRS Comments on BREP’s Acquisition of 417 MW of Hydroelectric Assets in Pennsylvania,” dated February 6, 2014), the Acquisition is viewed as modestly negative for BREP’s business risk profile since the majority of its generation output is exposed to the merchant power market. Currently, BREP’s rating is supported by a highly contracted and diversified asset portfolio with contracted output on a proportionate basis at approximately 93% for 2014. Should contracted output fall below 80% due to the acquisition of additional merchant assets and/or the expiry of existing power contracts without proper hedging, the Company’s business risk profile could be negatively impacted.

The Acquisition consists of acquiring the remaining 67% economic interest in the 417 megawatt Safe Harbor hydroelectric facility, located on the Susquehanna River in Pennsylvania. Safe Harbor generates approximately 1,100 gigawatt hours annually, with significant storage capabilities allowing for daily peaking. The purchase price of the Acquisition is $613 million and it will be funded with the Company’s available liquidity, available capital from BREP’s institutional partners and non-recourse debt. The Acquisition is expected to close in the third quarter of 2014, subject to regulatory approvals.

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

The applicable methodologies are Rating Companies in the Non-Regulated Electric Generation Industry (January 2014), Preferred Share and Hybrid Criteria for Corporate Issuers (Excluding Financial Institutions) (December 2013) and Rating Holding Companies and Their Subsidiaries (January 2014), which can be found on our website under Methodologies.