DBRS Morningstar Removes Ratings of Clover Limited Partnership from Under Review-Neg, Confirms Ratings at BBB, Stable

DBRS Limited (DBRS Morningstar) removed the Issuer Rating and the ratings of the Series A Senior Notes and Series B Senior Notes issued by Clover Limited Partnership (the Issuer) from Under Review with Negative Implications, where they were placed on January 16, 2019 (please refer to the DBRS Morningstar press release published on January 16, 2019, for more information), and confirmed all of the ratings at BBB with a Stable trend.

These rating actions follow emergence of Pacific Gas and Electric Company (PG&E or the Company) from Chapter 11 bankruptcy protection on July 1, 2020, which significantly reduces the risk that the power purchase agreement (PPA) with PG&E, one of the six PPA/swap counterparties for the portfolio of operating wind and solar power-generating assets partially owned by the Issuer, could be renegotiated or disclaimed. The PG&E PPA is a 20-year, fixed-price agreement with expiry in May 2034, for the delivery of renewable energy credits for the Blackspring Ridge wind facility located in Alberta and accounts for approximately 7% of the Issuer portfolio’s EBITDA (on an annual basis).

The Issuer continued to receive payments under its PPA with PG&E during the Company’s Chapter 11 reorganization process and DBRS Morningstar expects that the Issuer will continue to receive payments under its PG&E PPA; however, DBRS Morningstar acknowledges the operational, safety, and governance challenges PG&E faces as it emerges from bankruptcy protection. The Issuer’s portfolio continues to perform reasonably well. In 2019, overall generation was slightly above P50 levels, average availability was healthy at around 98%, and the project exceeded its rating-case debt service coverage ratio of 1.34 times.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

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

The principal methodologies are Rating Wind Power Projects (August 21, 2019), Rating Solar Power Projects (August 21, 2019), and DBRS Morningstar Criteria: Rating Corporate Holding Companies and Parent/Subsidiary Rating Relationships (November 25, 2019), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

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@dbrsmorningstar.com.

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.

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

DBRS Morningstar will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, contact us at info@dbrsmorningstar.com.

For more information on this credit or on this industry visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577