TerraForm Global (GLBL), Terraform Private Ratings Cut by S&P

Standard & Poor's Ratings Services lowered all its ratings on Terraform Private LLC (Private) and TerraForm Global Inc. (Global)(Nasdaq: GLBL), including the corporate credit rating to 'B-' from 'B'. The rating outlook is stable.

"The rating actions on Private and Global are due to a downward assessment of SunEdison's group credit profile following its recent execution on a series of debt exchange transactions that, in our view, represent a distressed debt exchange," said Standard & Poor's credit analyst Nora Pickens. Private's stand-alone credit profile (SACP) remains 'b', reflecting our assessment of its "weak" business risk profile and "highly leveraged" financial risk profile. Global's SACP remains 'b+', reflecting our assessment of its "weak" business risk profile and "significant" financial risk profile. We view Global and Private as insulated subsidiaries of SunEdison, so we have linked the ratings. In our view, SunEdison has substantial control over both entities. SunEdison owns a substantial portion of Global's common stock and 100% of the incentive distribution rights. SunEdison also owns all of Private's common stock and 100% of the common voting rights. At the same time, however, we
believe the operating entities benefit from various structural protections, allowing the ratings to be higher than that of the parent company.

TerraForm Private LLC

Per our group ratings methodology, we generally do not lower the ratings of insulated subsidiaries, like Private, below 'B-' unless we believe that the subsidiary would likely be drawn into an insolvency of the parent company. The outlook on Private is stable, as its SACP of 'b' is above its corporate credit rating of 'B-'.

Any further credit degradation at SunEdison would not lead to a negative rating action on Private unless we believe it's likely that Private will be drawn into insolvency proceedings of the parent company. We could also lower ratings if Private's liquidity unexpectedly becomes constrained or we believe that its capital structure becomes unsustainable, which would prompt a downgrade into the CCC category.

If SunEdison's creditworthiness improves, we could raise the rating on Private, assuming that its SACP remains at least 'b' or higher.

TerraForm Global Inc.

Per our group ratings methodology, we generally do not lower the ratings of insulated subsidiaries, like Global, below 'B-' unless we believe that the subsidiary would likely be drawn into an insolvency of the parent company. The outlook on Global is stable, as its SACP of 'b+' is above its corporate credit rating of 'B-'.

Any further credit degradation at SunEdison would not lead to a negative rating action on Global unless we believe it's likely that the Global will be drawn into insolvency proceedings of the parent company. We could also lower ratings if Global's liquidity unexpectedly becomes constrained or we believe that its capital structure becomes unsustainable, which would prompt a downgrade into the 'CCC' category.

If SunEdison's creditworthiness improves, we could raise the rating on Global, assuming that its SACP remains at least 'b' or higher.

You May Also Be Interested In

• Lowe's (LOW) PT Lowered to $275 at Guggenheim
• Wells Fargo Starts Vivmark Residential (VMRK) at Overweight, 'Setting the mark for growth'
• UBS says bull market has further to run