DBRS cuts Northwestern Hydro Acquisition

DBRS said it downgraded the issuer and senior secured bond ratings to BBB (high) from A (low) and maintained the negative trends on Northwestern Hydro Acquisition Co. Inc., Northwestern Hydro Acquisition Co. II LP and Northwestern Hydro Acquisition Co. III LP.

“The rating downgrades stem from (1) consistent underperformance of the debt service coverage ratio (DSCR) below the level required for the A (low) rating category, due in large part to repeated general cost overruns from operational issues as well as unanticipated repairs from high water events and other incidents in the years immediately following the financing; and (2) structural and likely long-term increases in operating expenditure projections going forward, particularly with respect to labor costs and repair/maintenance costs,” DBRS said in a press release.

The agency said it sees the issuers’ DSCR rebounding above 1.5x but not before 2027-2028.

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