DBRS Morningstar Assigns Ratings of BBB (high) with Stable Trends to Nova Scotia Power’s $500 Million Notes Issues

DBRS Limited (DBRS Morningstar) assigned ratings of BBB (high) with Stable trends to Nova Scotia Power Inc.’s (NSPI or the Company) $500 million Notes (the Notes) offering, which is composed of $300 million of 4.951% Series 2023-1 Notes due 2032, and $200 million 5.355% Series 2023-2 Notes due 2053. The ratings assigned to the Notes are based on the ratings of other already-outstanding series of Unsecured Debentures & Medium-Term Notes.

The Notes will be unsecured, unsubordinated obligations of NSPI and will rank pari passu with all other unsecured and unsubordinated indebtedness of the Company. Net proceeds from the issuances will be added to the general funds of NSPI and applied primarily to refinance existing indebtedness, including bank indebtedness, to finance capital expenditures, and for other general corporate purposes.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Environmental (E) Factors
Carbon and greenhouse gas costs have a relevant effect on the credit analysis of NSPI. DBRS Morningstar considers the Company's transition from reliance on coal-based generation (51% of 2022 installed generation capacity) to lower-emitting sources to be a challenge, as coal-fired generation is mandated to be phased out, and 80% of electricity sales are to be from renewable sources by 2030. Significant investments are needed in the Province of Nova Scotia (the Province), but given the financial constraints on NSPI in the near term from the political intervention in the 2022 to 2024 General Rate Application, it will be challenging for the Company and the Province to meet these goals.

There were no Social/Governance factors that had a significant or relevant effect on the credit analysis.

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/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings (May 17, 2022).

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

The principal methodology applicable to the rating is the Global Methodology for Rating Companies in the Regulated Electric, Natural Gas, and Water Utilities Industry (https://www.dbrsmorningstar.com/research/402616; September 13, 2022).

The rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

A description of how DBRS Morningstar analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://www.dbrsmorningstar.com/research/397223/interplay-of-global-corporate-finance-rating-methodologies-when-analyzing-corporate-finance-transactions

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

Information regarding DBRS Morningstar ratings, including definitions, policies, and methodologies, is available on www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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