Research Update: ExGen Renewables IV LLC Ratings Placed on Credit Watch Negative Following Recent Downgrade of PG&E Corp.

ExGen Renewables IV LLC (EGR IV) receives 40% - 45% of its distributions from single asset AV Solar Ranch (AVSR). AVSR operates under a power purchase agreement (PPA) with utility Pacific Gas&Electric Co. (B/Watch Neg/B). We placed our ratings on EGR IV on CreditWatch with negative implications to reflect the rating action taken on utility, Pacific Gas&Electric Co. (Pac Gas) and parent PG&E Corp. on Jan. 7, 2019. The CreditWatch placement on EGR IV reflects the risks to its distributions from the AVSR contract in light of recently elevated risks at PG&E, which is a PPA counterparty to AVSR. We believe that the souring political and regulatory environment at PG&E could, in the worst case, lead

...+ ExGen Renewables IV LLC (EGR IV) receives 40% - 45% of its distributions from single asset AV Solar Ranch (AVSR). AVSR operates under a power purchase agreement (PPA) with utility Pacific Gas & Electric Co. (B/Watch Neg/B). + We placed our ratings on EGR IV on CreditWatch with negative implications to reflect the rating action taken on utility, Pacific Gas & Electric Co. (Pac Gas) and parent PG&E Corp. on Jan. 7, 2019. + The CreditWatch placement on EGR IV reflects the risks to its distributions from the AVSR contract in light of recently elevated risks at PG&E, which is a PPA counterparty to AVSR. We believe that the souring political and regulatory environment at PG&E could, in the worst case, lead to a PG&E bankruptcy. If that were to occur, PG&E could seek to reject the AVSR contract, or separately seek renegotiation at a lower price, which could potentially worsen EGR IV's financial measures significantly. In addition, EGR IV's 's satisfactory business risk profile, which is underpinned...

Research Update