ALGONQUIN POWER & UTILITIES CORP.
The Issuer is wholly owned by
KEY CREDIT RATING CONSIDERATIONS
The confirmations and the Stable trends reflect Morningstar DBRS's view that no material changes to APCO's credit fundamentals are expected in the medium term. The Issuer Rating is based on (1) APCO's solid contractual profile with approximately 80% of the revenues earned under long-term and inflation adjusted contracts (approximately 10 years as of
CREDIT RATING DRIVERS
Morningstar DBRS does not expect to take a positive credit rating action in the near to medium term. However, Morningstar DBRS may take a negative credit rating action if APCO's business risk profile deteriorates significantly or its cash flow-to-debt ratio remains below 15% on a sustained basis.
EARNINGS OUTLOOK
APCO's revenue was lower for the last twelve months ended
FINANCIAL OUTLOOK
We expect key metrics to continue to support the credit rating in 2024 due to a solid contract profile assuming normal weather conditions. Morningstar DBRS also notes that APCO could benefit from liquidity support from APUC if required.
CREDIT RATING RATIONALE
APCO's business risk profile remained stable in 2023, and there were no major adverse changes that negatively affected APCO's credit profile. In
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://dbrs.morningstar.com/research/427030 (
BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of BRA Factors
In the analysis of APCO, the BRA factors are considered in the order of importance contemplated in the methodology.
(B) Weighting of FRA Factors
In the analysis of APCO, the FRA factors are considered in the order of importance contemplated in the methodology.
Weighting of the BRA and the FRA
In the analysis of APCO, the BRA carries greater weight than the FRA.
Notes:
All figures are in
Morningstar DBRS applied the following principal methodology:
Global Methodology for Rating Companies in the
The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.
A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/397223.
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.
The credit ratings were initiated at the request of the rated entity.
The rated entity or its related entities did participate in the credit rating process for these credit rating actions.
Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with these credit rating actions.
These are solicited credit ratings.
The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.
Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.
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