DBRS Morningstar Confirms Waterloo North Hydro Inc. Rating at A (low) With a Stable Trend

DBRS Limited (DBRS Morningstar) confirmed the Issuer Rating of Waterloo North Hydro Inc. (Waterloo North or the Company) at A (low) with a Stable trend. The rating reflects the stability of Waterloo North’s electricity distribution business operating under a reasonable regulatory framework in a growing franchise area as well as the Company’s strong financial risk profile. Waterloo North’s rating is one notch lower than its DBRS Morningstar-rated peers in the Ontario electricity distribution sector, largely because of the Company’s above-average refinancing risk. DBRS Morningstar notes that an improvement in the Company’s refinancing risk could result in a positive rating action. Conversely, a negative rating action could occur if key credit metrics fall below the level required to support the rating.

DBRS Morningstar notes that all shareholders of Waterloo North Hydro Inc. and Kitchner-Wilmot Hydro Inc. have approved the proposed merger of the two utilities, which, following Ontario Energy Board approval, is expected to close in 2022. The proposed merger is expected to have a modestly positive impact. Please refer to DBRS Morningstar’s press release dated December 20, 2021.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is Rating Companies in the Regulated Electric, Natural Gas and Water Utilities Industry (September 24, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (https://www.dbrsmorningstar.com/research/373262; February 3, 2021).

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrsmorningstar.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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