SunEdison's TerraForm Yieldcos Get Credit Downgrade by S&P

  • Links to parent SunEdison's credit trigger downgrades
  • TerraForm Power cut to B- from B+ with a negative outlook

Debt for SunEdison Inc.’s two power-plant holding companies was downgraded by Standard & Poor’s, in part because of stronger ties to their corporate parent and highly leveraged acquisitions.

TerraForm Power Inc. was downgraded to B- from B+ and TerraForm Global Inc. was lowered to B from B+ and both were given negative outlooks, the ratings service said in a statement after the close of regular trading Dec. 18.

SunEdison has lost two-thirds of its market value this year as investors question its ability to fund wind and solar farms it’s planning to build or buy all over the world. The two TerraForm units, which were formed to buy and operate power plants, are closely linked to SunEdison’s expansion plans. S&P credit analyst Nora Pickens said SunEdison’s planned acquisition of Vivint Solar Inc. and TerraForm Power’s highly leveraged purchase of Invenergy LLC power plants, which was partially completed last week, triggered the downgrades.

The downgrade on TerraForm Power “mainly reflects its aggressive debt financing of the recently closed Invenergy acquisition and potentially a similar aggressive financing of the pending Vivint acquisition,” Pickens said in the statement.

It also reflected a management change last month that saw SunEdison Chief Financial Officer Brian Wuebbels appointed CEO of both TerraForm units. S&P said the new structure
creates “a stronger linkage” between the two companies and SunEdison.

Before it's here, it's on the Bloomberg Terminal.