Moody's rates FREIF loan Ba3

Moody's Investors Service said it assigned Ba3 ratings to FREIF NAP I Holdings III, LLC's proposed $250 million senior secured term loan B due 2022, $45 million funded letter-of-credit term loan facility due March 2022 and $15 million senior secured revolving credit facility due March 2019. The outlook is stable.

Proceeds from the term loan B will be used to repay about $186 million outstanding under a senior secured term loan at FREIF North American Power I LLC (Ba3/stable) and to make a roughly $48 million distribution to the borrower's owner, First Reserve Energy Infrastructure Advisors, LLC.

The agency said the Ba3 rating reflects the fairly stable cash flows generated by FREIF NAP's portfolio of 13 power plants, the output from which is contracted with investment-grade off-takers; the long-dated weighted average contract life (12 years) and the portfolio diversification across four states.

In Moody’s view, however, these positive attributes are balanced by the significant amount of operating-level debt, the company’s lenders’ structurally subordinated position to operating-level lenders, financial metrics that are weak for the rating category and refinancing risk.

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