S&P upgrades Atlantic Power

Standard & Poor’s said it raised the corporate credit ratings on Atlantic Power Corp. and affiliate Atlantic Power Ltd. Partnership to B+ from B.

The outlook is stable.

The agency also said it raised the ratings on the $600 million secured term loan facility and $210 million secured revolving credit facility to BB- from B+.

The recovery rating on this debt remains at 2, indicating 70% to 90% expected default recovery.

S&P also said it raised the rating on the C$210 million 5.95% medium-term notes due 2036 to BB from BB-. The recovery rating on this debt remains at 1, indicating 90% to 100% expected default recovery.

There is about $108 million of non-recourse project level debt and about $288 million of U.S.- and Canadian-dollar denominated convertible unsecured subordinate debentures that aren’t rated. The company’s capital structure also has C$225 million of perpetual preferred stock.

The company’s B+ corporate credit rating reflects its fair business risk profile and highly leveraged financial risk profile, S&P said.

The ratings also consider the company’s reliance on distributions from its underlying portfolio of power generation projects, limited scale, near-term focus on operational improvements and a portfolio that is mostly contracted in the medium term, the agency said.

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