DBRS Confirms Great Lakes Power Limited at A (low), Stable Trend

DBRS has today confirmed the ratings of Great Lakes Power Limited’s (GLPL) Senior Secured Bonds at A (low) and Subordinate Secured Bonds at BBB, both with Stable trends.

The confirmation reflects GLPL’s strong earnings and interest coverage ratios generated by its low-cost hydroelectric generating facilities and electricity transmission assets, both located in Ontario.

GLPL’s ratings remain primarily constrained by its exposure to commodity price risk, as all generation outputs are sold to the spot market, and production risk that is mainly due to changes in hydrological conditions and potential outages. DBRS notes that the debt service reserve that covers nine months of senior bonds’ interest payments can mitigate short-term cash flow disruptions caused by temporary periods of low market prices and/or poor hydrology in the generation business.

DBRS will continue to monitor the development of Brookfield Asset Management Inc.’s recent announcement regarding its intention to distribute its infrastructure operations to its shareholders via a new entity.

Note:
All figures are in Canadian dollars unless otherwise noted.