DBRS Assigns Provisional Rating of A (high) with Stable Trend to Lower Mattagami Energy Limited Partnership’s Senior Secured Bonds
Project FinanceDBRS has today assigned a provisional rating of A (high) with a Stable trend to the $200 million Series 2014-1 Senior Secured Bonds (the Bonds) issued by Lower Mattagami Energy Limited Partnership (LMELP or the Issuer; rated A (high) and R-1 (low)). This rating is based on the existing LMELP Issuer Rating of A (high), which was intended to apply to multiple secured bond issuances for a total amount of $1.9 billion. Please refer to the rating report dated March 7, 2014, for more details.
The financing plan to fund the $2.6 billion redevelopment and expansion of the Lower Mattagami River Project includes Senior Secured Bonds to be issued in various series throughout the construction period to repay interim funding amounts provided by the $600 million commercial paper program (rated R-1 (low) by DBRS), backstopped by $600 million in bank credit facilities. Net proceeds from the current Bonds offering will be used to repay $200 million outstanding commercial paper. Including the expected issuing amount of $200 million for the current Bond series, the total Senior Secured Bonds outstanding will be approximately $1.63 billion.
The Bonds are being issued by way of private placement and pursuant to a master trust indenture and supplemental indenture. The Bonds will be direct, secured and unsubordinated obligations of the Issuer, ranking equally with all other bonds of the Issuer. The Bonds are obligations of LMELP and are guaranteed by the affiliate Lower Mattagami Limited Partnership. Until the Recourse Release Date, which is after construction completion, the Bonds also have full recourse to the sponsor, Ontario Power Generation Inc. (rated A (low) and R-1 (low) by DBRS).
Construction, which commenced in June 2010, has been progressing well and in line with the approved budget. The Little Long station achieved commercial operation in January 2014 and earlier this month, the Harmon station came into service, three months ahead of schedule. Total life-to-date expenditures are approximately $2.1 billion at March 31, 2014, with completion scheduled for June 2015.
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All figures are in Canadian dollars unless otherwise noted.
The applicable methodology is Rating Project Finance (August 2013), which can be found on our website under Methodologies.
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