{"id":17054,"date":"2011-11-16T13:20:16","date_gmt":"2011-11-16T17:20:16","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=17054"},"modified":"2011-11-16T13:20:16","modified_gmt":"2011-11-16T17:20:16","slug":"czp-pr-a-czp-pr-b-dbrs-downgrades-to-pfd-4","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=17054","title":{"rendered":"CZP.PR.A, CZP.PR.B: DBRS Downgrades to Pfd-4"},"content":{"rendered":"

Ask and ye shall receive! Just yesterday<\/a>, I noted:<\/p>\n

I think there must be something going on behind the scenes at Atlantic Power \/ CPI Preferred Equity with respect to the ratings on CZP.PR.A & CZP.PR.B. The takeover closed two weeks ago, after DBRS had warned of a massive downgrade \u2026 and nothing\u2019s happening. Perhaps ATP is frantically trying to put some kind of deal together? We shall see!<\/p><\/blockquote>\n

Well, what we see is a DBRS announcement<\/a>:<\/p>\n

DBRS has today downgraded the ratings of Capital Power Income L.P.\u2019s (CPILP or the Partnership) Senior Unsecured Debt & Medium-Term Notes, to BB from BBB (high) and also downgraded the Cumulative Preferred Shares of CPILP\u2019s affiliate, CPI Preferred Equity Ltd., to Pfd-4 from Pfd-3. The trends are now stable. As part of our leveraged finance rating methodology, DBRS has also assigned an Issuer Rating of BB to CPILP and a recovery rating of RR4 (indicating an expected recovery of 30% to 50%) on the Senior Unsecured & Medium Term Notes.<\/p>\n

The downgrade reflects the closing of the previously announced acquisition of CPILP by Atlantic Power Corporation (ATP, not rated by DBRS) (the Transaction) on November 7, 2011. DBRS had stated in its October 21, 2011, Comment that if the Transaction closes as currently anticipated, the Transaction is expected to result in a downgrade of CPILP\u2019s ratings to BB. CPILP\u2019s Issuer Rating of BB is based on DBRS\u2019s assessment of the new combined entity.
…<\/b>
Current estimated credit metrics for the combined entity of EBITDA-to-interest of 2.7 times (x), cash flow from operation-to-debt of 10.7%, debt-to-capital of 59% and debt-to-EBITDA of 5.6x are weaker than CPILP\u2019s stand-alone credit metrics. Furthermore, CPILP and various subsidiaries will be providing guarantees to the following ATP obligations:<\/p>\n

(1) ATP\u2019s new $300 million secured credit facility.<\/p>\n

(2) ATP\u2019s $460 million senior unsecured note with 9% coupon due in 2018. The guarantees of the ATP bonds will be senior unsecured obligations of the respective guarantors and will rank equally in right of payment with all of the guarantors existing and future senior debt of the guarantor and will be effectively subordinated in right of payment to all secured debt of each guarantor.<\/p>\n

All of CPILP\u2019s bonds will be subordinated to ATP\u2019s $300 million credit facility. Due to the binding of ATP and CPILP through the guarantees, DBRS views the entities as a combined credit.<\/p><\/blockquote>\n

CZP.PR.A (a PerpetualDiscount) and CZP.PR.B (a FixedReset) were last mentioned on PrefBlog in the post CZP.PR.A, CZP.PR.B: Takeover by ATP Approved \u2013 Downgrade Coming<\/a>. Both are tracked by HIMIPref™; both are relegated to the Scraps index on credit concerns.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ask and ye shall receive! Just yesterday, I noted: I think there must be something going on behind the scenes at Atlantic Power \/ CPI Preferred Equity with respect to the ratings on CZP.PR.A & …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-17054","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/17054","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17054"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/17054\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17054"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17054"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17054"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}