Bonds and Financing

Marin Clean Energy earns new, higher investment grade credit rating from Fitch Ratings

Fitch Ratings on August 25 assigned a ‘BBB+’ Issuer Default Rating to Marin Clean Energy (MCE), an upgrade of the California community choice aggregator’s previous rating of BBB.

Among the reasons for the upgrade are MCE’s increase of available cash on hand from 80 days to 160 days, as well as almost doubling MCE’s available liquidity over the past year.

The BBB+ rating takes into consideration MCE’s strong financial profile and successful management of its load during COVID-19 shifts.

MCE noted that it was the first CCA to receive an investment-grade credit rating, with a Baa2 Issuer Rating issued by Moody’s in May 2018, as well as the first to receive a second from Fitch Ratings in August 2019.

Fitch’s upgraded investment-grade credit rating generally reflects the ability of MCE to meet its financial obligations. MCE has no direct debt outstanding.

The rating also reflects MCE’s Board decision made in November 2019, to increase reserves of cash on hand to 240 days.

“The upgrade to ‘BBB+’ is based on stronger than expected financial performance in the past year, the intent to retain larger cash reserve balances and a resolution of rate and regulatory uncertainty that has existed during the Pacific Gas & Electric bankruptcy (PG&E),” said Fitch Rating’s statement. “MCE’s rating is further supported by a strong financial profile that reflects consistently improving liquidity levels over the past two years and helps mitigate the risks associated with the competitive pressures.”

MCE noted that the benefits of the BBB+ rating include:

  • MCE’s ability to negotiate lower energy prices and improved credit terms for future contracts;
  • Further validation of the CCA business model from an internationally-recognized rating agency; and
  • Assurance for customers that MCE’s financial strength is sound and that it will continue to provide competitively-priced and reliable clean energy services over the long term.

Other CCAs have received positive credit ratings

Several other California CCAs have received positive credit ratings.

Moody’s Investor Service on July 15 assigned a first time Baa2 issuer rating to Silicon Valley Clean Energy.

The Baa2 rating recognized SVCE’s stability within the California CCA business model and the strong socio-economic conditions of the SVCE service area, despite the negative impacts of the COVID-19 pandemic.

In May 2019, Moody’s assigned a first-time Baa2 issuer rating to Peninsula Clean Energy, a California CCA.

The American Public Power Association has initiated a new category of membership for community choice aggregation programs.