Topaz Solar Farms LLC Ratings Lowered To 'B' From 'BBB-', Remain On CreditWatch Negative Following Downgrade Of PG&E


  • On Jan. 7, 2019, S&P Global Ratings lowered its long-term issuer credit rating on utility Pacific Gas & Electric Co. (PG&E) to 'B' from 'BBB-' and kept the rating on CreditWatch with negative implications.
  • Topaz Solar Farms receives all of its revenue from PG&E under a long-term power purchase and sale agreement (PPSA). Our rating on the solar project is currently capped by our view of the credit quality of PG&E, its utility offtaker.
  • Therefore, we are lowering our ratings on Topaz Solar Farms LLC by five notches to 'B' from 'BBB-', to reflect the downgrade of PG&E, and are maintaining the ratings on CreditWatch, where we placed them with negative implications on Nov. 19, 2018. We are also assigning our '1' recovery rating to Topaz Solar's secured debt.
  • The CreditWatch negative listing reflects the increasing risk that we will downgrade PG&E by one or more notches over the next few months. If we lower our ratings on PG&E again it could lead us to take an equivalent action on our ratings on Topaz Solar Farms LLC.
NEW YORK (S&P Global Ratings) Jan. 10, 2019—S&P Global Ratings today took the 
rating actions listed above. Topaz Solar Farms LLC is a 550-megawatt (MW) 
photovoltaic solar power project in San Luis Obispo County, Calif. that 
completed final construction on Feb. 28, 2015. The total construction cost was 
about $2.4 billion. The project's parent is BHE Renewables (BHER). Topaz has a 
25-year PPSA with utility offtaker PG&E. Our 'B' rating on the project is 
constrained by our rating on PG&E. Therefore, any degradation in PG&E's 
creditworthiness could lead us to downgrade Topaz.

The CreditWatch negative listing on Topaz Solar mirrors our CreditWatch 
listing on PG&E. Given that our ratings on the project are capped by our 
senior secured rating on PG&E, further downgrades of PG&E could cause us to 
take similar actions on Topaz Solar. If PG&E files for Chapter 11 this could, 
subject to it being a material adverse effect, trigger a cross default under 
Topaz Solar's financing documents unless the power contract is replaced within 
90 days of the bankruptcy event.
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