Fitch downgrades Genesis Solar trust certificates following PG&E news

Fitch Ratings has downgraded certain trust certificates of Genesis Solar LLC, the holding company for a 250-MW concentrated solar power (CSP) plant in California, to reflect the situation of debt-laden off-taker PG&E.

While the agency has affirmed at 'AAA'/Outlook Stable the USD 561.6 million (EUR 492.5m) 3.875% series A trust certificates of Genesis Solar due 2038, it has downgraded to 'C' from 'BBB-' its USD-140.4-million 5.125% series B trust certificates due 2038. The series A trust certificates have USD 321.63 million outstanding and the series B have USD 80.41 million outstanding.

California utility Pacific Gas and Electric Company (PG&E), owned by PG&E Corporation (NYSE:PCG), is the sole purchaser of the electricity generated by the Genesis solar plant. PG&E this week announced it was getting ready to initiate voluntary reorganisation proceedings under Chapter 11 on or about January 29, and this led to its downgrade to 'C' from 'BBB-'/Rating Watch Negative by Fitch.

The agency said that the rating of Genesis’ series B certificates is constrained by the rating of PG&E, while the series A certificates are guaranteed by the US federal government (AAA/Stable). It added that a potential loss of the solar plant’s power purchase agreement (PPA) with PG&E “would weaken the project's financial profile, and in a merchant scenario its cash flows would likely be inadequate to repay the debt.”

The Genesis solar plant consists of two 125-MW solar fields using parabolic trough technology, each owned by NextEra Energy Resources LLC, an indirect subsidiary of NextEra Energy Inc (NYSE:NEE).

(USD 1.0 = EUR 0.877)

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