Alta Wind Holdings LLC 'BBB-' Bond Rating Placed On CreditWatch Negative On Downgrade Of Southern California Edison

  • Alta Wind Holdings LLC (Alta) receives all of its revenues from utility Southern California Edison Co. (SCE) under a long-term power purchase agreement (PPA).
  • S&P Global Ratings lowered its long-term issuer credit rating on SCE to 'BBB' from 'BBB+' and placed the ratings on CreditWatch with negative implications On Jan. 21, 2019.
  • There is still one notch of headroom between the rating on the project's bonds and that on the counterparty.
  • However, we are placing the 'BBB-' rating on Alta's bonds on CreditWatch with negative implications to mirror the CreditWatch on the rating on SCE, which reflects that SCE faces elevated credit risks because of its susceptibility to frequent and devastating wildfires and our assessment of the insufficient regulatory protections to deal with the unique risks of inverse condemnation. SCE's future credit trajectory is now the primary risk for the rating on the project.
  • We could lower our rating on Alta, along with our downgrade of SCE, if we downgrade the utility company by at least two notches.
SAN FRANCISCO (S&P Global Ratings) Jan. 24, 2019--S&P Global Ratings today 
took the rating actions listed above. The placement of the 'BBB-' senior 
secured issue ratings on Alta's $579.9 million senior secured amortizing bonds 
due 2035 on CreditWatch with negative implications reflects our downgrade of 
SCE to 'BBB' from 'BBB+' on Jan. 21, 2019. SCE is the sole revenue 
counterparty to Alta, purchasing all of its electricity from the wind facility 
under a long-term PPA. The credit quality of the project debt can be no higher 
than that of the revenue counterparty due to the project's material reliance 
on SCE for its revenue. Therefore, the credit quality of Alta's bonds will 
move lower if we downgrade the utility company by more than two notches.

The CreditWatch with negative implications mirrors the listing of our ratings 
on SCE, which provides the project with all of its revenues for the power it 
produces. The project rating on Alta is now within one notch of the issuer 
credit rating on SCE. A single-notch downgrade would not result in a downgrade 
of Alta but multiple notches would cause us to downgrade Alta to the same 
rating.