Moody’s gives B3 to Genneia notes

Moody's Investors Service said it assigned a B3 rating to Genneia SA's proposed $300 million senior unsecured notes due 2024.

The outlook is stable.

Proceeds will be used to repay most of the company’s outstanding short-term debt (about $255 million of debt due in 2017) while the remainder will be used to fund its investment program.

The proposed notes will be senior unsecured with a bullet amortization.

Moody’s said the B3 rating mainly reflects the predictable and stable cash flows under Genneia's long-term power purchase agreements (PPAs) that currently comprise all of its revenues. Payments under the company’s PPAs are dollar-denominated.

“Approximately two-thirds of the company's revenues come from capacity payments and are therefore not subject to realized energy dispatch,” Moody’s said in a news release.

“In addition, fuel costs under those contracts (gas or fuel oil) are passed-through to the off-taker under the PPAs and consequently there is no cash flow exposure to changes in fuel prices. The remainder of the company’s cash flows come from wind energy, whose revenues dependent on the real dispatch.

“Moody’s notes that Genneia’s track record of more than 4 years of operations is well aligned with the company's previous expectations of capacity factors averaging 43%,” the agency added.

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