DBRS Assigns A (high) Provisional Rating to Lower Mattagami Energy Limited Partnership Senior Secured Bonds

DBRS has today assigned a provisional rating of A (high) with a Stable trend to Series 2013-1 Senior Secured Bonds (the Bonds) to be issued by Lower Mattagami Energy Limited Partnership (LMELP or the Issuer; rated A (high) and R-1 (low)). This rating is based on the existing LMELP Issuer Rating of A (high), which had been intended to apply to LMELP’s secured bond issuance. Please see the recent rating report for more detail.

The financing plan to fund the $2.6 billion redevelopment and expansion of the Lower Mattagami River Project includes $1.9 billion Senior Secured Bonds to be issued in various series throughout the construction period to repay interim funding provided by a $700 million Commercial Paper program (rated R-1 (low)), backstopped by a total of $700 million in bank credit facilities. There is currently no commercial paper outstanding. Net proceeds from the current Bonds offering will be used to partially repay $312 million of construction cost payables. Including the expected issuing amount of $275 million for the current Bond series, the total Senior Secured Bonds outstanding will be approximately $1.3 billion.

The Bonds are being issued by way of private placement, and pursuant to a master trust indenture and supplemental indenture. The Bonds will be direct, secured and unsubordinated obligations of the Issuer, ranking equally with all other bonds of the Issuer. The Bonds, obligations of LMELP, are also guaranteed by affiliate Lower Mattagami Limited Partnership and have full recourse until the Recourse Release Date to sponsor Ontario Power Generation Inc. (OPG; rated A (low) and R-1 (low)).

Construction commenced in June 2010. As of January 31, 2013, according to OPG, work was proceeding consistent with the approved budget and schedule. Total life-to-date expenditures were approximately $1.3 billion.

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

The applicable methodology is Rating Project Finance (April 2011), which can be found on our website under Methodologies.