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Standard & Poor’s has announced:

• We are raising our long-term corporate credit rating on Algonquin Power & Utilities Corp. (APUC) and subsidiaries Algonquin Power Co. (APCO) and Liberty Utilities Co. to ‘BBB’ from ‘BBB-‘.
• We are also raising our senior unsecured debt rating on APCO to ‘BBB’ from ‘BBB-‘.
• In addition, we are raising our global scale and Canada scale preferred stock ratings on APUC to ‘BB+’ and ‘P-3 (High)’ from ‘BB’ and ‘P-3’, respectively.
• We base the upgrade on the increase in regulated cash flow, which is currently at 40%-45% of consolidated cash flow and which we forecast will continue to increase in the medium term.
• The stable outlook reflects our assessment of relatively stable cash flows supported by regulated cash flow from Liberty’s regulated utility business and APCO’s largely contracted power asset portfolio.

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The stable outlook reflects our assessment of relatively stable cash flows, supported by regulated cash flow from Liberty’s regulated utility business, and APCO’s largely contracted power asset portfolio.

We could take a negative rating action if APUC fails to execute its development projects and acquisitions with financing arrangements that allow it to maintain its key financial measures. We expect APUC to achieve AFFO-to-total debt of greater than 15% within the next 12 to 24 months, with at least 45% of its consolidated cash flows supported by regulated cash flows from Liberty. Failure to achieve this expectation could also result in a negative rating action.

We could raise the rating if APUC achieves sustained AFFO-to-debt of greater than 25%, with a higher proportion of cash flow contributions from Liberty, all else being equal.

This entry was posted on Friday, October 11th, 2013 at 6:23 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.