S&P gives UEP Penonome notes BB

S&P said it assigned a preliminary BB rating to project UEP Penonome II SA’s proposed notes. The project plans to sell up to $275 million in senior secured amortizing notes due 2038.

“The preliminary rating incorporates our view of a relatively stable and predictable cash flow generation underpinned by the project’s contracted nature until 2033. While in the last five years of the transaction, contracts will mature and the project will be exposed to market exposure, it will be mitigated by stronger credit metrics,” S&P said in a press release.

The agency assigned a stable outlook. The outlook reflects an expectation that UEP II will generate the projected revenue in the next 12–24 months. The debt service coverage ratio will remain at the lower end of the 1.20x-1.25x range, with at least a six-month debt service reserve account, S&P said.

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