Morningstar DBRS Confirms Clover Limited Partnership Credit Ratings at BBB, Changes Trends to Positive

DBRS Limited (Morningstar DBRS) confirmed Clover Limited Partnership's (the Issuer) Issuer Rating and its Series A Senior Notes and Series B Senior Notes credit ratings at BBB and changed the trends to Positive from Stable. The Issuer, an indirect and wholly owned subsidiary of Canada Pension Plan Investment Board, is a special-purpose vehicle that owns a 49% interest in Enbridge Canadian Renewable LP (the JV), with the remaining 51% owned by Enbridge Pipelines Inc. and Enbridge Income Partners Holdings Inc. The JV owns an approximate 74% interest (1,030 megawatts (MW)) in a 1,392-MW portfolio (the Portfolio) of 10 operating wind-power-generating facilities (with a total capacity of approximately 1,292 MW) and three operating solar-power-generating facilities (with a total capacity of 100 MW; collectively, the Facilities or Assets) across Canada. The Issuer's interest in the Portfolio (the Issuer's Portfolio) amounts to approximately 36%.

KEY CREDIT RATING CONSIDERATIONS
The Positive trends reflect (1) the Portfolio's consistently strong operating (robust project availability and stable operating costs) and financial performance since debt issuance with its debt service coverage ratio (DSCR) materially exceeding Morningstar DBRS' credit rating case, (2) perceptible portfolio benefits, an effective resource risk mitigant, and (3) potential upside from recontracting and/or merchant revenues compared with initial projections.

In 2024, the Portfolio's (and, correspondingly, the Issuer's Portfolio's) overall generation was approximately 0.3% above P50 levels. The average availability in 2024 was healthy at around 97.6%, and the project's DSCR was approximately 1.57 times (x), exceeding its credit rating case (based on P90 generation levels) DSCR of 1.34x. We note that the Portfolio continues to perform well with operating and financial performance materially exceeding initial projections on a consistent basis over past five years. Specifically, the project DSCRs are 1.64x, 1.61x, 1.67x, 1.50x, and 1.57x in 2020, 2021, 2022, 2023, and 2024, respectively, and average availability remains high at 97.4%, 96.7%, 96.8%, 98%, and 97.6% in the same periods. We expect the Project's operating and financial performance to remain strong in 2025 and beyond.

The expirations of swap agreements of Magrath wind project (November 2024) and Blackspring Ridge wind project (December 2025) are expected to have minimal financial impact on the Portfolio. Magrath wind project, one of the smallest wind assets, will continue generating merchant revenues, while Blackspring Ridge wind project will continue to generate revenue through its renewable energy credit power purchase agreement, which runs through May 2034, and merchant revenue.

CREDIT RATING DRIVERS
Morningstar DBRS may consider a negative credit rating action if the Issuer's Portfolio were to experience a sustained underperformance compared with the credit rating case; for example, an increase in operating and maintenance (O&M) expenses, reduced availability with material impacts on the DSCR, and/or deterioration in the credit profile of the power purchase agreements/swap counterparties. Morningstar DBRS may take a positive credit rating action in the near to medium term if the Issuer's Portfolio continues to perform materially better than the credit rating case, including generation around P50 levels, on a consistent basis.

FINANCIAL OUTLOOK
In 2025, the DSCR is expected to meet or exceed the credit rating case. The overall performance is expected to remain stable beyond 2025 as well.

CREDIT RATING RATIONALE
The credit ratings remain supported by (1) long-term contracted revenues with highly creditworthy offtakers, (2) good operating track record with cash flows supported by a regionally and technologically diversified asset base, (3) upside potential from merchant revenue from wind facilities located in Alberta, and (4) an experienced owner-operator. The credit ratings are constrained by (1) wind/solar resource and energy production uncertainty, (2) O&M and capex risk, and (3) a weaker-than-standard security package.

The Issuer benefits from cash flows generated from a regionally diverse portfolio of 10 wind-power-generating projects and three solar-power-generating projects located in Canada and contracted with highly creditworthy offtakers.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025) https://dbrs.morningstar.com/research/454196.

CREDIT RATING DRIVERS AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of Rating Driver Factors
In the analysis of Clover Limited Partnership, the Rating Driver factors listed in the methodology are considered in the order of importance.

(B) Weighting of FRA Factors
In the analysis of Clover Limited Partnership, the following FRA factor listed in the methodology was considered more important: DSCR (the only applicable FRA factor)

(C) Weighting of the Rating Driver and the FRA
In the analysis of Clover Limited Partnership, the FRA carries greater weight than the Rating Driver.

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

Morningstar DBRS applied the following principal methodology: Global Methodology for Rating Project Finance (December 10, 2024) https://dbrs.morningstar.com/research/444393.

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (February 3, 2025) https://dbrs.morningstar.com/research/447186 which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodology has also been applied:
Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025) https://dbrs.morningstar.com/research/454196.

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

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 info-DBRS@morningstar.com.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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