Algonquin Power & Utilities Corp.'s $350 Million Series 2019-A Subordinated Notes Due 2079 Rated 'BB+'

TORONTO (S&P Global Ratings) May 17, 2019--S&P Global Ratings today assigned its 'BB+' issue-level rating to Algonquin Power & Utilities Corp.'s (APUC) $350 million series 2019-A subordinated notes due 2079. The company intends to apply the net proceeds from these notes towards the repayment of existing indebtedness, its previously-announced acquisition of Enbridge Gas New Brunswick Limited Partnership and for general corporate purposes.
We classify these notes as hybrid securities with intermediate equity content (50%). We rate the securities two notches below our 'BBB' long-term issuer credit rating on APUC to reflect their subordination and the company's ability to defer interest payments on the notes. Our intermediate equity treatment is premised on the instrument's permanence, subordination, and deferability features.
The security's long-dated nature, along with the company's limited ability and lack of incentives to redeem the issue for a long-dated period, meets our standards for permanence. In addition, the interest payments are deferrable, which fulfills the deferability element. The instrument is also subordinated to all of APUC's existing and future senior debt obligations, thereby satisfying the condition for subordination.
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