Link to Fitch Ratings’ Report(s): Thermal Power Project Rating Criteria
Fitch Ratings-New York/Chicago/London-01 June 2018: Fitch Ratings has completed the annual update of its “Thermal Power Project Rating Criteria”. The update included refining the revenue risk key rating driver (KRD) assessment, and establishing a clearer link between the revenue risk assessment and indicative coverage guidance.
The update revises the Indicative Coverage Ratios Guidance table in Figure 5 by linking indicative coverage thresholds to the revenue risk KRD. For projects with no merchant exposure and a stronger revenue risk assessment, the indicative coverage thresholds guidance is lowered to 1.5x for ‘A-‘ rated projects, 1.3x for ‘BBB-‘ rated projects and 1.15x and for ‘BB-‘ rated projects. Revenues for projects with a stronger revenue risk KRD rely almost exclusively on contracted capacity payments from strong investment grade counterparties, with cash flows independent of dispatch levels, justifying using lower coverage threshold guidance. The indicative coverage guidance remains unchanged for projects with weaker and midrange revenue risk assessments.
The update clarifies that ratings at or below the ‘B’ category are guided by Fitch’s ratings definitions and also the assessments assigned for all the qualitative key rating drivers.
The update also includes minor clarifications throughout the text and some editing changes.
Fitch does not expect any rating changes as a result of the updated criteria. The report replaces the June 8, 2017 version and is available at www.fitchratings.com or by clicking on the link above.
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Jelena Babajeva
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Kim Locherer
Director
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