Morningstar DBRS Assigns Credit Ratings of A (high) with Stable Trends to Hydro One Inc.’s $800 Million Medium-Term Notes Issues

DBRS Limited (Morningstar DBRS) assigned credit ratings of A (high) with Stable trends to Hydro One Inc.’s (HOI or the Company) $800 million Medium-Term Notes (the Notes) offering, which is composed of $250 million re-opening of 3.93% (Series 53) due 2029, and $550 million 4.39% (Series 59) due 2034. The credit ratings assigned to the Notes are based on the credit ratings of other already-outstanding series of Senior Unsecured Debentures.

The Notes will be direct, unsecured obligations of HOI, ranking pari passu with all other unsecured and unsubordinated indebtedness of the Company. HOI intends to allocate net proceeds from the Series 53 Notes to finance and/or refinance, in whole or in part, new and/or existing eligible green and social projects that meet the eligibility criteria described in the Company’s Sustainable Financing Framework (the framework), and allocate net proceeds from the Series 59 Notes to finance and/or refinance, in whole or in part, new and/or existing eligible green projects that meet the eligibility criteria described in the framework. Prior to such allocation, net proceeds may be initially used, in part or in full, for repayment of indebtedness or investments in bank deposits or other cash equivalents.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://dbrs.morningstar.com/research/416784 (July 4, 2023).

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of BRA Factors
In the analysis of HOI, the BRA factors are considered in the order of importance contemplated in the methodology.

(B) Weighting of FRA Factors
In the analysis of HOI, the FRA factors are considered in the order of importance contemplated in the methodology.

(C) Weighting of the BRA and the FRA
In the analysis of HOI, the BRA carries greater weight than the FRA.

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

Morningstar DBRS applied the following principal methodology:
-- Global Methodology for Rating Companies in the Regulated Electric, Natural Gas, and Water Utilities Industry (https://dbrs.morningstar.com/research/421106; September 27, 2023).

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

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/397223.

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-DBRS@morningstar.com.

The credit ratings were initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for these credit rating actions.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with these credit rating actions.

These are solicited credit ratings.

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

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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