Moody's rates Orcal notes Ba1

Moody's Investors Service said it assigned a Ba1 rating to $165 million of senior secured notes due 2020 to be issued by OrCal Geothermal Inc.

The outlook is stable.

Moody's said the rating reflects the company's high degree of cash flow predictability, low contract-extension risk, the long track record of parent Ormat Nevada and structural protections for bondholder, that include secured upstream guarantees from the underlying operating companies, a trustee-administered series of revenue and expense accounts, an independent director and a cash funded at close six-month debt service reserve.

These credit strengths are balanced by the company's substantial leverage; its reliance upon affiliated companies for operations, management and technology support; a high concentration of the revenue source from SCE, as the principal off-taker, and the expectation that OrCal's future revenues are likely to exhibit greater volatility after April 2007 when the energy compensation payments revert to a short run avoided cost calculation, the agency said.

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