DBRS Confirms AltaLink Investments, L.P. at BBB, Stable

DBRS Limited (DBRS) has today confirmed the Issuer Rating and rating of the Senior Unsecured Bonds of AltaLink Investments, L.P. (AILP), both at BBB with Stable trends. The rating confirmation is supported by the strong credit quality of its wholly owned operating subsidiary, AltaLink, L.P. (ALP or OpCo; rated “A”; see DBRS AltaLink, L.P. rating report dated September 20, 2016).

AILP’s ratings are notched down from OpCo’s rating to reflect the following: (1) structural subordination of the debt at AILP relative to OpCo, (2) relatively high leverage at the AILP level, and (3) reliance on a single operating subsidiary for cash distributions to AILP.

With the downshifting of Alberta’s economy and completion of the “big build” associated with electric transmission infrastructure, OpCo’s capex is expected to further normalize over the next two years, while its earnings and operating cash flow will benefit from a higher rate base. As a result, DBRS expects excess cash, which is not required to maintain the regulatory capital structure, will flow up to AILP. A positive rating action could be warranted should ALP’s higher cash distributions be used to pay down debt and improve financial flexibility.

Notes:
All figures are in Canadian dollars unless otherwise noted.

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.

The applicable methodologies are Rating Companies in the Regulated Electric, Natural Gas and Water Utilities Industry (October 2015) and DBRS Criteria: Rating Holding Companies and Their Subsidiaries (January 2016), which can be found on our website under Methodologies.

DBRS will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, contact us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.