S&P Upgrades NPI to P-3(high)

Standard & Poor’s has announced:

  • We are raising our long-term corporate credit rating on Northland Power Inc. (NPI) to ‘BBB’ from ‘BBB-‘.
  • We are also raising our global scale and Canada scale preferred stock ratings on NPI to ‘BB+’ and ‘P-3(High)’ from ‘BB’ and ‘P-3’, respectively.
  • As well, we are affirming our ‘BBB’ issue-level rating on the company’s senior secured debt.
  • The upgrade reflects our assessment of NPI’s consistent cash flow generation, coupled with the completion of its North Battleford project on time and within budget.
  • The stable outlook reflects our belief that the company will continue to perform as it has been, maintaining its credit metrics commensurate with the higher rating over the next two years.


The stable outlook reflects our view of NPI’s partially consolidated financial measures, which we believe will remain at or above 30% parent-only cash flow (POCF)-to-debt, and our expectation that the company will continue to finance its projects with nonrecourse project debt. The outlook also reflects our expectation that NPI’s long-term contracted power generation businesses will continue to produce stable and predictable cash flows with a quality of cash flow score of 5. We believe there will be a modest improvement in its diversity with respect to asset concentration, counterparty, and fuel type as its various projects come online on time and budget.

Given the potential for additional financial commitments to the Gemini project in addition to what the company has already committed to, we don’t expect an upgrade during the next two-to-three years.

Conversely, if the Gemini project should experience material unanticipated delays or cost increases or POCF-to-debt consistently falls below 22% on a partially deconsolidated basis, we would consider a downgrade.

NPI has two series of preferred shares outstanding, NPI.PR.A and NPI.PR.C, both FixedResets at +280 and +346 respectively. NPI.PR.A was last mentioned on PrefBlog when the ticker changed from NPP.PR.A in January 2011; NPI.PR.C was last mentioned when the issue closed in May, 2012. Both issues are tracked b HIMIPref™; both are relegated to the Scraps subindex on credit concerns.

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