ExGen Renewables IV LLC

The stable outlook reflects our expectation that EGR IV's portfolio will operate in line with budget and generate predictable cash flows to support the company's debt obligations over our 12-month outlook horizon. Because EGR IV is a fully contracted closed portfolio of operating renewable assets with long-term offtake agreements at fixed or escalating prices, the key exposures are resource risk, operating issues, and higher-than-expected operating costs. We expect partially consolidated debt to EBITDA of below 8x and funds from operations (FFO) to debt of above 8% after 2022. We could lower the rating if deleveraging or cash sweeps do not meet our expectations, the credit quality of any of EGR IV's major counterparties deteriorates, the company encounters material operational issues

...The company's high level of contractedness results in good cash flow visibility. Most of ExGen Renewables IV LLC's (EGR IV) assets are contracted, which should result in high cash flow predictability. About 96% of cash flows are contracted until 2027. Closed-end portfolio with material cash flow sweep should result in improving credit metrics. EGR IV's structure is a closed-end portfolio, which, combined with the 75% excess cash sweep of the term loan B (TLB), should result in improving credit metrics. Because of the closed-end nature of the portfolio, we don't expect project acquisitions or additional debt. High degree of reliance on distributions from AVSR creates some concentration risks. More than 50% of EGR IV's distributions come from AVSR, which creates a high degree of reliance on this particular asset. This is material because if AVSR's ability to make distributions to EGR IV was affected, it could affect EGR IV's ability to sweep cash and meet our debt metric expectations....

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