Fitch Rates Continental Wind, LLC's Senior Secured Notes 'BBB-'

  Fitch Rates Continental Wind, LLC's Senior Secured Notes 'BBB-'

Business Wire

CHICAGO -- October 7, 2013

Fitch Ratings has assigned a 'BBB-' rating with a Stable Outlook to $613
million of senior secured notes issued by Continental Wind, LLC (CW or the
portfolio).

Proceeds from the senior secured notes, which closed on Sept. 30, 2013, will
be used by CW to make a distribution to the sponsor, Exelon Generating
Company, LLC (IDR 'BBB+' with a Stable Outlook).

Final pricing for the senior secured notes provided for a coupon rate of 6%,
which is above initial expectations. The sponsor resized the debt issuance to
$613 million from $635 million to maintain debt service coverage ratios
(DSCRs) in the Fitch rating case.

KEY RATING DRIVERS

--Largely Contracted Revenues: The portfolio projects have entered into
fixed-price, 20- to 25-year power purchase agreements (PPAs) for all energy
produced, subject to maximum delivery provisions for three Michigan-based
projects and the Michigan Midwest Independent System Operator's Dispatchable
Intermittent Resources (DIR) program. Any energy in excess of the PPA
requirements is being sold at market prices. Unbundled PPA renewable energy
credits (RECs) are sold at fixed prices and protected by favorable change in
law provisions. Eligible production tax credits (PTCs) are being sold to
Exelon Corporation at published PTC prices, introducing inflation price risk.
The Michigan- and Kansas-based projects are subject to heightened curtailment
risk, but the Shooting Star PPA provision, transmission upgrades, the IE
estimated curtailment loss factors, and Fitch production stresses help account
for potential shortfalls in delivered energy.

Revenue Risk - Price: Midrange

--Diverse Wind Resource: The energy production assessments were generally
completed with an amount and quality of data consistent with the industry
standard. Fitch believes that the diversity of 13 project sites with multiple
wind regimes helps to mitigate collective wind resource volatility. However,
the portfolio effect is unproven and limited actual data is available to
validate estimates. Fitch concludes that a portfolio benefit is likely
present, but the extent remains uncertain.

Revenue Risk - Volume: Midrange

--Manageable Operating Risk: The wind turbine technologies employed by the CW
projects are evolutionary designs and generally considered to be proven.
However, some of the turbine models have experienced component issues in their
respective fleets, which the IE considers to be typical and correctable.
Further, component issues are covered under warranty and generally considered
in production loss factors and cost estimates.

Operation Risk: Midrange

--Conventional Debt Structure: The fixed-rate, fully amortizing debt is
sculpted to account for the expiration of PTCs, roll-off of PPA RECs, and PPA
maturities. Equity distribution and additional debt provisions are typical of
similarly rated wind projects. All reserves have been funded with letters of
credit that are pari passu to the senior secured notes.

Debt Structure: Midrange

--Investment-grade Financial Profile: Fitch views financial performance in the
Fitch rating case to be consistent with an investment-grade rating. The Fitch
rating case combines lower energy output and availability with a higher cost
profile resulting in average and minimum DSCRs of 1.38x and 1.33x,
respectively.

Debt Service: Midrange

RATING SENSITIVITIES

--Production Shortfalls: Persistently lower than estimated energy production
and lower DSCRs may lead to a downgrade.

--Operational Challenges: Decreased project availability or an inability to
effectively manage operating & maintenance costs and DIR charges resulting in
DSCRs below 1.3x may lower the rating.

SECURITY

First priority security interest in all tangible and intangible assets of the
issuer and its project companies, as well as a pledge of Continental Wind
Holding, LLC's membership interest in CW. CW is restricted from selling any
assets material to the operation of any project, subject to the terms of the
permitted asset sale provision. Fitch notes that any proceeds from permitted
asset sales, except non-material assets up to $25 million, will be used to
redeem a portion of the notes.

In addition, Exelon Corporation entered into a tax equity put option
exercisable by lenders upon acceleration and equity foreclosure of CW. The put
expires on the earlier of 2023 or the expiry of the PTCs, and requires the
off-taker pay the net present value of 99% of any PTCs earned and 5% of
distributable cashflows under a one-year P90 estimate using a 15% discount
rate. Fitch believes that the put option proceeds are sufficient to fully
repay any PTC-related debt outstanding in all years.

For a complete review of Fitch's analysis of the portfolio please refer to
Fitch's press release 'Fitch Expects to Rate Continental wind, LLC's Proposed
Senior Secured Notes 'BBB-'' dated Sept. 5, 2013 and Fitch's pre-sale report
for Continental Wind issued on Sept. 6, 2013. Both are available at
www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Rating Criteria for Infrastructure and Project Finance' (July 11, 2012)

--'Rating Criteria for Onshore Wind Farm Projects' (April 11, 2013).

Applicable Criteria and Related Research:

Rating Criteria for Infrastructure and Project Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682867

Rating Criteria for Onshore Wind Farm Projects

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=705018

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=804276

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Contact:

Fitch Ratings
Primary Analyst:
Dino Kritikos, +1-312-368-3150
Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst:
Yvette Dennis, +1-212-908-0668
Director
or
Committee Chairperson:
Greg Remec, +1-312-606-2339
Senior Director
or
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Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com