DBRS Confirms the Guaranteed Senior Bonds Issued by Muskrat Falls/Labrador Transmission Assets Funding Trust and Labrador-Island Link Funding Trust at AAA, Stable Trend

DBRS Limited (DBRS) has today confirmed the AAA rating with a Stable trend on the Guaranteed Senior Bonds (the Bonds) issued by Muskrat Falls/Labrador Transmission Assets (MFA/LTA) Funding Trust and Labrador-Island Link (LIL) Funding Trust. The two funding trusts were established to facilitate the financing of the Muskrat Falls Project (the Project), an 824-megawatt hydroelectric power generating facility and the associated transmission lines, being developed in Newfoundland and Labrador. The Bonds of $5.0 billion in aggregate consist of (1) 3.63% Bonds, Series A, due June 1, 2029; 3.83% Bonds, Series B, due June 1, 2037; and 3.86% Bonds, Series C, due December 1, 2048, for an aggregate $2.6 billion issued by MFA/LTA Funding Trust; and (2) 3.76% Bonds, Series A, due June 1, 2033; 3.86% Bonds, Series B, due December 1, 2045; and 3.85% Bonds, Series C, due December 1, 2053, for an aggregate $2.4 billion issued by LIL Funding Trust. Each series of the Bonds will fully amortize by their respective maturity date.

The Bonds are unconditionally and irrevocably guaranteed by the Government of Canada (Canada; rated AAA, Stable by DBRS). Therefore, the rating of the Bonds moves in tandem with Canada’s rating, irrespective of the Project’s underlying risks. This rating confirmation follows DBRS’s November 25, 2016, confirmation of Canada’s sovereign rating at AAA with a Stable trend.

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 Project Finance and DBRS Criteria: Guarantees and Other Forms of Support, which can be found on our website under Methodologies.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

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.