DBRS Confirms Muskrat Falls/Labrador Transmission Assets Funding Trust and Labrador-Island Link Funding Trust at AAA, Stable

DBRS Limited (DBRS) has today confirmed the rating of AAA with a Stable trend on the Guaranteed Senior Bonds (the Bonds) issued by both Muskrat Falls/Labrador Transmission Assets Funding Trust and Labrador-Island Link Funding Trust (the Issuers), the special-purpose financing trusts established under the laws of Newfoundland and Labrador to finance specific parts of the Lower Churchill Project (the Project). The Bonds consist of (i) 3.63% Series A Guaranteed Senior Bonds maturing on June 1, 2029, the 3.83% Series B Guaranteed Senior Bonds maturing on June 1, 2037, and the 3.86% Series C Guaranteed Senior Bonds maturing on December 1, 2048, in an aggregate amount of $2.6 billion of Muskrat Falls/Labrador Transmission Assets Funding Trust; and (ii)3.76% Series A Guaranteed Senior Bonds maturing on June 1, 2033, the 3.86% Series B Guaranteed Senior Bonds maturing on December 1, 2045, and the 3.85% Series C Guaranteed Senior Bonds maturing on December 1, 2053, in an aggregate amount of $2.4 billion of Labrador-Island Link Funding Trust.

The proceeds of the Bonds are being used to finance specific parts of the Project. The ratings reflect the unconditional and irrevocable guarantee provided by the Government of Canada (rated AAA with a Stable trend by DBRS) on the Bonds. In March 2014, the Government of Newfoundland and Labrador established the Muskrat Falls Oversight Committee (the Committee) to strengthen the oversight of the Project. According to the Committee’s latest report, the Project budget was revised to $7.65 billion in late September 2015 from $6.99 billion. The critical path to first power for December 2017 is also under review. Nonetheless, DBRS believes that its rating on the Bonds will move in tandem with guarantor Canada’s rating, irrespective of the Project’s underlying risks.

Notes:
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are Rating Project Finance and DBRS Criteria: Guarantees and Other Forms of Explicit Support, which can be found on our website under Methodologies.

The full report providing additional analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.