North West Redwater Partnership Debt Rating Affirmed At 'BBB+' Following Downgrade To CNRL

  • On March 27, 2020, S&P Global Ratings affirmed its 'BBB+' issue-level rating on North West Redwater Partnership's (NWR) senior secured debt.
  • Following our downgrade on Canadian Natural Resources Ltd. (CNRL; BBB/Stable/A-2), our rating on NWR remains unchanged, given the project's importance to the Province of Alberta.
  • The stable outlook reflects that of the project's two counterparties, CNRL and Alberta.
TORONTO (S&P Global Ratings) March 27, 2020--S&P Global Ratings today took the rating actions listed above.
NWR is a 50-50 partnership between NWU L.P. and CNR (Redwater) Ltd., a wholly owned core subsidiary of CNRL. NWR is building and will operate an upgrading and refining facility with a processing capacity of 78,655 barrels per day of bitumen blend. The refinery is in Alberta's industrial heartland, 40 kilometers northeast of Edmonton.
On March 27, 2020, S&P Global Ratings affirmed its 'BBB+' issue-level rating on NWR's senior secured debt, with a stable outlook.
The affirmation follows a downgrade to counterparty CNRL on March 26, 2020. The downgrade on CNRL flows through to NWR's stand-alone credit profile (SACP), which we revised to 'bbb' from 'bbb+'. However, our view of moderate likelihood of extraordinary support from the Province of Alberta results in a one-notch uplift from the SACP.
The stable outlook reflects that of the project's two counterparties, CNRL and Alberta, given the credit substitution under the tolling agreements. The outlook also reflects our expectation that the project will receive support from Alberta, given its importance to the province.
We would likely lower the rating on NWR during our outlook period if we were to lower the rating on either of the counterparties, CNRL or Alberta, or if our view of the moderate likelihood of extraordinary support from Alberta were to change.
During our outlook period, we could look to raise the rating on NWR if we were to raise the ratings on CNRL by at least two notches, or if we raise the rating on both Alberta and CNRL by one notch. In addition, although unlikely, we could raise the rating if we strengthened our view of the likelihood of support from Alberta through APMC.
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