DBRS confirms TransAlta notes

DBRS said it confirmed the unsecured debt/medium-term notes rating of TransAlta Corp. at BBB with a stable trend following TransAlta's announcement that it has taken up and paid for 87% of Canadian Hydro Developers, Inc.'s outstanding common shares.

This rating action removes TransAlta's rating from Under Review with developing implications, where it was placed on July 20. At that time, DBRS stated that TransAlta's rating would not be impacted if the transaction was completed at a price and on terms as was expected.

The agency views the acquisition as a good strategic fit for TransAlta because of the similarity of the two companies' business models and the addition of renewable generation to TransAlta's existing portfolio, currently dominated by thermal generation.

TransAlta's long-term financing structure of the transaction is viewed as conservative by DBRS. The company will use cash, existing credit facilities and a committed acquisition facility to initially fund the transaction, and this initial funding will subsequently be replaced with permanent financing that will be a combination of longer-term debt and C$350 million to C$400 million of equity.

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