WoDS Transmission plc
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Moody's affirms WoDS Transmission plc's A3 senior secured rating; outlook stable
London, 02 November 2020 -- Moody's Investors Service, ("Moody's") has today affirmed the A3 rating to the GBP 254.8 million 3.446% senior secured bonds (the Bonds) issued by WoDS Transmission plc (WoDS). The outlook on the rating remains stable.
RATINGS RATIONALE
The A3 rating is supported by (1) a strong regulatory framework that provides for stable and predictable cash flows over the 20-year period of revenue entitlement within the Ofgem license, with an annual cap on any revenue deductions; (2) low operating risk with all operating and maintenance activities contracted to experienced counterparties; (3) a 5-year operational track record; (4) the credit enhancement provided as part of the European Investment Bank's (EIB) Project Bond Credit Enhancement (PBCE) programme; and (5) creditor protections that are typical for project financing structures, including debt service and liquidity reserves, restrictions on business activities and additional indebtedness.
Conversely, the rating is constrained by (1) a difficult natural environment within which to manage unplanned maintenance; (2) high senior leverage of around 80% as at the end of June 2020, albeit this is not uncommon for projects of this nature; and (3) the single asset nature of the project.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
WoDS's A3 rating reflects our expectation of continued high asset availability. An upgrade of the rating is unlikely over the short to medium term given WoDS's high leverage.
We could downgrade the rating following: (1) material operational performance issues or cost increases that weren't passed through or recoverable from third parties; or (2) unfavourable regulatory developments.
WoDS is the owner of the West of Duddon Sands offshore transmission assets located approximately 14 kilometres off the Cumbrian coast in north-west England. The offshore transmission assets connect the 389 megawatt (MW) West of Duddon Sands wind farm, which comprises 108 Siemens 3.6 MW wind turbine generators, to the onshore transmission network. In 2015 WoDS issued GBP 254.8 million 3.446% of senior secured bonds (the Bonds) to finance the acquisition of the offshore transmission assets.
The principal methodology used in this rating was Regulated Electric and Gas Networks published in March 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1059225. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Alastair Sullivan, CFA
Asst Vice President - Analyst
Public Proj & Infrastr Fin
Moody's Investors Service Ltd.
One Canada Square
London E14 5FA
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Kevin Maddick
Associate Managing Director
Public Finance Group
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