DBRS Publishes Final Project Finance, Public-Private Partnerships and Related Methodologies

DBRS published five methodologies as follows:

(1) Rating Project Finance
(2) Rating Public-Private Partnerships
(3) DBRS Criteria: Recovery Ratings for Non-Investment Grade Corporate Issuers
(4) Rating Wind Power Projects
(5) Rating Solar Power Projects

These methodologies are effective as of today and supersede the versions of each published in February 2018.

On August 30, 2018, DBRS requested comments on the updates to these five methodologies, with the comment period ending on September 30, 2018. DBRS received comments from two commenters, each of whom requested confidentiality. Comments received addressed several topics, including credit enhancements during the construction period, operating and maintenance, lifecycle and inflation resiliencies and the contractual and regulatory framework, among others. While most comments were directed at the “Rating Public-Private Partnerships” methodology, some (such as the contractual and regulatory framework, in particular) also applied to the “Rating Project Finance” methodology. No comments received were specifically directed at the wind, solar or recovery ratings methodologies.

In response to these comments, DBRS made some minor clarifications to the “Rating Public-Private Partnerships” methodology and “Rating Project Finance” methodology. In addition, DBRS added some examples as to when the A (low) minimum threshold for financial counterparties may not be met without downward rating pressure being applied. The solar, wind and recovery ratings methodologies remain unchanged compared with the versions previously released for public comment.

In the coming weeks, DBRS will publish new Issuer Ratings (typically equal to the rating for the current most senior tranche of debt) for each project finance (including wind and solar projects) and public-private partnership transaction currently rated by DBRS, as well as recovery ratings for transactions with non-investment-grade Issuer Ratings.

As initially disclosed in the August 30, 2018, request for comment press release, DBRS continues to expect that the implementation of these new methodologies may result in a one-notch upgrade to one existing publicly rated public-private partnership transaction. DBRS does not, however, believe that any project finance, wind, solar or recovery rating will change.

DBRS publishes on its website any comments received, except in cases where confidentiality is requested by the respondent.

Notes:
The methodology providing DBRS’s processes and criteria is available by contacting 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.