Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually.

Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit ratings’ performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

Scope has completed a monitoring review for CPPIB Renewables Europe Sàrl on 11 January 2022:

Senior secured notes, current outstanding balance EUR 439.9m: BBB+

This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Transaction overview

The project underlying the senior notes is currently the largest offshore wind farm project in Germany. The project comprises two adjacent offshore wind farms: Hohe See (497MW) and Albatros (112MW) in the German North Sea. Both offshore windfarms have been feeding power into the grid and generating cash available for debt service since October 2019.

The project is sponsored by EnBW, which holds the majority stake (50.1%). Enbridge and Canada Pension Plan Investment Board (CPP Investments) own the remaining 49.9%. Enbridge joined the project as a strategic partner to EnBW in 2017. In 2018, Enbridge secured CPP Investments as a 49.0% co-investor in its renewable energy projects in Europe and North America.

The transaction represents the senior secured notes totaling EUR 510.6m issued to finance CPP Investments’ interest in the project. CPP Investments holds an indirect share of 24.45% in both offshore wind farms. CPP Investments will remain exposed to the project through its subordinated investment. 

Key rating factors

The BBB+ rating reflects a total expected loss of 0.57% over the notes’ life until maturity (equivalent to a 5.45-year constant-exposure expected risk horizon). Key drivers are the solid track record so far and low risks during the operating phase, especially with regard to the sponsors and revenue generation. The economic value of cash flows and the extensive experience and strong economic incentives of the sponsors and operators mitigate the risks contributed by the project structure and its financial strength.

The Covid-19 pandemic has had no significant impact on the project to date.

The better-than-expected energy production in the first quarter of 2021 was more than offset by the weak results of the subsequent quarter. Exceptionally low wind speeds and curtailments were the main reasons for the negative deviation on a quarterly and half-year basis. The regulator partially compensated the project for this underperformance. On a half year basis, this resulted in an operating cash flow that was 4% above Scope’s rating case assumptions. The technical availability of the wind turbines and the total project was significantly higher than expected. Scope expects full-year cash flow to be broadly in line with its forecasts based on year-to-date performance, including lower operating expenditures and higher wind speeds in the fourth quarter of 2021.

Credit metrics have remained robust and well within Scope’s rating case assumptions. The most recent compliance certificate for the period 31 October 2020 to 31 October 2021 confirmed strong financial ratios. The historical and projected debt service coverage ratios were 1.59 times and 1.62 times respectively (compared with 1.40 times expected in our rating case), while the note life coverage ratio reached 1.50 times. Debt service totaled EUR 49.7m in 2021 (2020: EUR 38.6m). 

The methodology applicable for the reviewed rating (General Project Finance Rating Methodology, 15 November 2021) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Torsten Schellscheidt, Executive Director

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