DBRS Comments on H2O Power Limited Partnership’s Debt Upsizing

DBRS Limited (DBRS) notes that H2O Power Limited Partnership (the Issuer; rated A (low) with a Stable trend by DBRS) upsized its Senior Secured Bonds (the Bonds; rated A (low) with a Stable trend by DBRS) with $60.05 million incremental pari passu bonds (the Additional Senior Debt; CUSIP NO. 40461PAB8) issued on June 13, 2019, permissible under the Common Terms and Intercreditor Agreement, in addition to the existing $400 million bonds issued on March 31, 2017. The Bonds are partially amortizing with a balloon repayment of 20% ($92.01 million) at bond maturity in November 2029. As a result of the debt upsizing, DBRS projects that the minimum debt service coverage ratio (DSCR) will drop to 1.65 times (x) from the previous minimum DSCR of 1.87x. DBRS notes that the projected DSCRs will continue to support the A (low) rating level. All other terms will also stay unchanged, except for a revised amortization schedule. DBRS is of the view that the issuance of the Additional Senior Debt does not result in the withdrawal, reduction or application of a Negative trend (Adverse Rating Effect) to the current Issuer Rating and Bonds rating.

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

The principal methodology is Rating Project Finance, which can be found on dbrs.com under Methodologies & Criteria.

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