DBRS Morningstar Confirms Ratings of DIM Wind, Limited Partnership & Co-Owners at “A,” Stable Trends

DBRS Limited (DBRS Morningstar) notes that, effective November 13, 2019, the name of the issuer, EEN CA Rivière du Moulin L.P., was changed to DIM Wind, Limited Partnership & Co-Owners (DIM Wind). The issuer comprises five co-owners of the 350-megawatt Rivière-du-Moulin wind-power-generating facility (the Project). The name change was made at the request of one of the Project’s co-owners. Each of the Project’s co-owners is joint and severally liable for the $320 million Senior Loan due November 24, 2034 (the Senior Loan). The Senior Loan was made by several major Canadian financial institutions.

DBRS Morningstar also confirmed DIM Wind’s Issuer Rating and Senior Loan rating at “A.” Both trends are Stable. The rating confirmations reflect the Project’s continued strong operating and financial performance with a senior debt service coverage ratio (DSCR) of 3.05 times (x) in 2018 and 3.56x for the last 12 months ended June 30, 2019.

The Senior Loan was used to finance the development and operations of the Project, located approximately 130 kilometres north of Québec City. The Project sells all electricity generated to the offtaker, Hydro-Québec (rated A (high) with a Positive trend by DBRS Morningstar), under a 20-year power purchase agreement (PPA) that expires in November 2034, at which time the Senior Loan will be fully amortized.

The ratings are anchored by (1) the strength of the long-term inflation-adjusted fixed-price PPA with a highly rated offtaker, (2) the proven wind turbine technology and appropriate operating and maintenance (O&M) arrangements with experienced wind turbine O&M providers, (3) the exceptionally strong minimum senior DSCR of 2.86x at P90 production levels (the DBRS Morningstar base case) for the term of the Senior Loan, (4) the reliable early operating and financial results matching or exceeding the DBRS Morningstar base-case projections and (5) the credit strength and technical expertise of the Project’s major co-owners. The main challenges include (1) long-term O&M risk, as the facility operates in relatively complicated terrain, and (2) energy production volatility caused by extreme weather events. The ratings are also constrained, to a degree, by some sub-standard structural features embedded in the loan covenant package and the offtaker’s rating, currently at the A (high) level. DBRS Morningstar notes that the Project’s turbine manufacturer filed for insolvency in early 2019, but this is not expected to materially affect the Project.

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

PXX means exceedance probabilities. A P50-P90-P99 value describes estimated minimum electricity generation with a probability of 50%, 90% or 99% in any given year (P50, one-year P90 and one-year P99). Unless otherwise specified, all PXX values in this press release are in reference to one-year PXX values.

The principal methodology is Rating Wind Power Projects, which can be found on dbrs.com under Methodologies & Criteria.

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 under Related Documents or by contacting us at [email protected].

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

For more information on this credit or on this industry, visit www.dbrs.com or contact us at [email protected].

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