DBRS: Capital Power, TransAlta to negative

DBRS said it changed the trends of all long-term debt ratings of Capital Power Corp., Capital Power LP and TransAlta Corp. (IPPs) to negative from stable.

The agency also changed the trend of TransAlta’s preferred share rating to negative from stable.

The actions reflect DBRS’ concern that the continued challenging wholesale power market environment and heightened political risk in Alberta may lead the IPPs’ credit risk profile to deteriorate to a level that is no longer consistent with their respective rating categories.

The actions at this time are limited to trend changes with no immediate rating downgrades, as the negative factors that could lead to downward rating pressure are over the medium- to long-term. DBRS does not anticipate any material weakness in the IPPs’ financial profile in 2016 from 2015, largely because of strong hedging support and manageable capital spending, despite lower power prices in Alberta.

DBRS also confirmed the preferred share rating of Capital Power Corp. at Pfd-3 (low) with a stable trend. This reflects DBRS’ belief that the existing preferred share rating is already conservative given that Capital Power Corp.’s senior unsecured debt is now guaranteed by Capital Power LP following the recent medium-term note exchange. The agency views it as unlikely that any debt instruments will be issued at Capital Power LP going forward, mitigating structural subordination risk.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.