Laserfiche WebLink
INFRASTRUCTURE AND PROJECT FINANCE <br /> =tIy <br /> MOODY Sir =t , <br /> INVESTORS SERVICE tst <br /> } inf .eµ '3.4g ..x <br /> CREDIT OPINION Minnesota Municipal Power Agency <br /> 1 August 2018 <br /> Update following Moody's Upgrade to Al from A2; Outlook <br /> efe Rate this Research Stable <br /> Summary <br /> Minnesota Municipal Power Agency's (MMPA:Al/stable) credit profile reflects the weighted <br /> Contacts average credit quality of its municipal members, including that of Elk River Municipal Utilities <br /> Scott Solomon +1.212.553.4358 <br /> (Aa3/STA)who will enter the membership beginning October 2018. <br /> VP-Sr Credit Officer MMPA's profile also benefits from improved financial performance,which has been driven <br /> Scott.Solomon@moodys.com <br /> by a combination of modest rate increases (about 2.6% in 2016 and 2.4% in 2017) and <br /> A.J.Sabatelte +1.212.553.4136 the implementation of cost control measures.As a result, MMPA's fixed obligation charge <br /> Associate Managing Director <br /> angelosabatelle@moodys.com coverage(FOCC) improved to more than 1.4x in 2016 and 2017 from 1.3x in 2015 and 1.2x <br /> in 2014.We anticipate MMPA's FOCC to remain in excess of 1.4x over the next three years <br /> CLIENT SERVICES allowing the joint action agency(JAA) to build-up incremental cash reserves that is expected <br /> Americas 1-212-553-1653 to be used to retire debt beginning in 2020. <br /> Asia Pacific 852-3551-3077 Rating outlook <br /> Japan 81-3-5408-4100 The stable outlook assumes MMPA's fixed obligation charge coverage remains in excess of <br /> EMEA 44-20-7772-5454 1.4x,that the credit quality of the members do not appreciably change, and that operating <br /> performance at the JAA's plants continue to remain strong. <br /> Factors that could lead to an upgrade <br /> • Significant deleveraging resulting in a debt ratio being less than 60%and an FOCC in <br /> excess of 2.0x on a consistent basis <br /> Factors that could lead to a downgrade <br /> » Underperformance of the JAA's generation assets or the execution of a power <br /> procurement process that materially erodes MMPA's cost competitiveness and financial <br /> metrics <br /> • Deterioration in the weighted average credit quality of its members. <br /> 144 <br />