{"id":48356,"date":"2017-04-11T21:56:00","date_gmt":"2017-04-12T01:56:00","guid":{"rendered":"https:\/\/prefblog.com\/?p=48356"},"modified":"2025-07-17T21:57:37","modified_gmt":"2025-07-18T01:57:37","slug":"ta-outlook-downgraded-to-negative-by-sp","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=48356","title":{"rendered":"TA Outlook Downgraded To Negative By S&#038;P"},"content":{"rendered":"<p>Standard &#038; Poor&#8217;s <a href=\"https:\/\/www.standardandpoors.com\/en_AU\/web\/guest\/article\/-\/view\/type\/HTML\/id\/1830276\">has announced<\/a>:<\/p>\n<blockquote>\n<ul>\n<li>\u2022TransAlta Corp.&#8217;s (TAC) reduction of contractedness via the expiry of Alberta power purchase agreements in 2018 and 2020 increases the company&#8217;s business risk.\n<li>\u2022TAC&#8217;s financial metrics, although improving, may not sufficiently offset the potential increase in business risk.\n<li>\u2022As a result, we are revising our outlook on the company to negative from stable.<\/ul>\n<p><b>&#8230;<\/b><br \/>&#8220;The outlook revision reflects our view that although TAC&#8217;s financial metrics have improved, they might not sufficiently offset the potential increase in business risk as a result of the reduction of contractedness via the expiry of the Alberta power purchase agreements in 2018 and 2020,&#8221; said S&#038;P Global Ratings credit analyst Stephen Goltz.<\/p>\n<p>Underpinning TAC&#8217;s strong business risk profile is the strength of the company&#8217;s contractual framework, in particular Alberta coal PPAs, which currently cover approximately 50% of TAC&#8217;s total capacity. The PPAs&#8217; structure has mitigated Alberta&#8217;s volatile electricity prices, particularly in the past two years.<br \/><b>&#8230;<\/b><br \/>The company has made strong inroads into deleveraging its balance sheet amid Alberta&#8217;s very difficult power market. For the outlook period we forecast adjusted funds from operations (AFFO)-to-debt to improve to around 20%. However, while financial metrics have improved and are forecast to continue to do so, we see some headwinds that might impede the company&#8217;s ability to further raise them to a level that would mitigate the PPAs&#8217; loss. We believe that the difficult operating environment will persist through the outlook period, with power prices likely to remain at their current depressed levels.<br \/><b>&#8230;<\/b><br \/>The negative outlook reflects our expectation that TAC&#8217;s business risk may increase as the company&#8217;s Alberta PPAs mature without TAC having an offsetting replacement mechanism that provides equivalent support to business risk or without continued improvement to financial metrics. We forecast that FFO-to-debt will be in the 18%-20% range and that contractedness will fall to about 73% in 2018 and to approximately 35% at the end of 2020 absent replacement contracts.<\/p>\n<p>We could take a negative rating action if we believe that the factors that support a positive comparable rating assessment modifier will not continue. This could result from a reduction of contractedness without the replacement equivalent mechanisms and adjusted FFO-to-debt remaining at about 20%.<\/p>\n<\/blockquote>\n<p>Affected issues are  TA.PR.D, TA.PR.E, TA.PR.F, TA.PR.H and TA.PR.J. <\/p>\n<p>This announcement follows last&#8217;s week&#8217;s <a href=\"http:\/\/prefblog.com\/?p=34596\">downgrade to Pfd-3(low) by DBRS<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Standard &#038; Poor&#8217;s has announced: \u2022TransAlta Corp.&#8217;s (TAC) reduction of contractedness via the expiry of Alberta power purchase agreements in 2018 and 2020 increases the company&#8217;s business risk. \u2022TAC&#8217;s financial metrics, although improving, may not &hellip;<\/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-48356","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/48356","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=48356"}],"version-history":[{"count":1,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/48356\/revisions"}],"predecessor-version":[{"id":48357,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/48356\/revisions\/48357"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=48356"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=48356"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=48356"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}