Press Release: S&PGR Revs Atlantica Otlk To Positive, Afrms ICR

The following is a press release from S&P Global Ratings:

-- S&P Global Ratings revised its outlook on Atlantica Yield PLC to
positive from stable and affirmed its 'BB' long-term issuer credit rating on
Atlantica.
-- At the same time, S&P Global Ratings assigned its 'BBB-' issue level
rating and '1' (90%-100%; rounded estimate: 95%) recovery rating to the $300
million amended revolving credit facility. We also affirmed our 'BB'
issue-level rating on the company's $255 million senior unsecured notes due
2019. The '3' recovery rating is unchanged.
-- Atlantica continues to pursue growth with investments in assets like
Melowind, ATN, and others while maintaining credit metrics between 3.0x-3.5x.
With the Algonquin acquisition last year, the company has access to a growth
pipeline, which provides visibility into potential acquisitions and cash flow
growth.
-- We expect Atlantica to maintain debt to EBITDA of around 3.0x to 3.5x
and funds from operations (FFO) to debt between 23% and 27% due to the
addition of newer assets and robust cash flows from its base assets that help
offset the exposure to PG&E Corp.

NEW YORK (S&P Global Ratings) May 1, 2019--S&P Global Ratings today took the
rating actions listed above. The affirmation and positive outlook reflects our
expectation that Atlantica will grow its scale, but continue to have fairly
predictable cash flows with a debt/EBITDA of 3.0x to 3.5x, with its 15%
exposure to PG&E through Mojave. Despite the uncertainty surrounding PG&E,
even under the worst case scenario (contract rejection at Mojave), we believe
Atlantica would still maintain leverage within the significant category (3.0x
to 4.0x) and we would not expect the rating to change as a result.
Additionally, any loss of Mojave cash flow would likely be partially offset by
cash flows from other, newer dropdowns from the right-of-first-offer (ROFO)
pipeline, organic growth, and other third-party acquisition opportunities.
Lastly, we note that PG&E has publically stated its intention to honor its
offtake agreement and the utility remains current with payments. While cash
could be trapped in the interim if there is no resolution by December (when
the distribution from the asset to Atlantica occurs), we view a complete
contract rejection as unlikely.

The positive outlook reflects our view that Atlantica's contracted assets will
continue to operate under long-term contracts with investment-grade
counterparties and generate fairly predictable cash flows to support its
holding company debt obligations. In our base-case scenario, we expect
FFO-to-debt of 23%-27% and debt-to-EBITDA of 3.0x-3.5x over our 12-month
outlook period. We also do not contemplate a rejection of the Mojave contract
by PG&E.

We would consider upgrading Atlantica if debt-to-EBITDA remains between 3.0
and 3.5x and FFO-to-debt remains around 25%. This could result from our view
that the company's cash flow stability is such that leverage will not increase
above 3.5x in any year and the scale and diversity compare well relative to
similar rated peers such as Clearway Energy Inc., NextEra Energy Partners LP,
and AES. An upgrade will likely also require more certainty around Mojave's
contract with PG&E.

A downgrade could occur if debt-to-EBITDA is above 4x and FFO-to-debt
consistently falls below 20% over our 12-month outlook period. This could
result from significantly reduced cash flows from the company's projects
following a decline in operating performance and asset reliability,
higher-than-expected operating costs, unfavorable weather, or increased
leverage at the corporate level.

RELATED CRITERIA

-- Criteria | Corporates | General: Corporate Methodology: Ratios And
Adjustments, April 1, 2019
-- Criteria - Corporates - General: Reflecting Subordination Risk In
Corporate Issue Ratings, March 28, 2018
-- General Criteria: Methodology For Linking Long-Term And Short-Term
Ratings, April 7, 2017
-- Criteria | Corporates | General: Recovery Rating Criteria For
Speculative-Grade Corporate Issuers, Dec. 7, 2016
-- Criteria - Corporates - Industrials: Methodology For Rating Project
Developers, March 21, 2016
-- Criteria | Corporates | General: Methodology And Assumptions:
Liquidity Descriptors For Global Corporate Issuers, Dec. 16, 2014
-- General Criteria: Country Risk Assessment Methodology And Assumptions,
Nov. 19, 2013
-- General Criteria: Group Rating Methodology, Nov. 19, 2013
-- General Criteria: Methodology: Industry Risk, Nov. 19, 2013
-- Criteria | Corporates | General: Corporate Methodology, Nov. 19, 2013
-- General Criteria: Methodology: Management And Governance Credit
Factors For Corporate Entities And Insurers, Nov. 13, 2012
-- General Criteria: Use Of CreditWatch And Outlooks, Sept. 14, 2009

Certain terms used in this report, particularly certain adjectives used to
express our view on rating relevant factors, have specific meanings ascribed
to them in our criteria, and should therefore be read in conjunction with such
criteria. Please see Ratings Criteria at www.standardandpoors.com for further
information. Complete ratings information is available to subscribers of
RatingsDirect at www.capitaliq.com. All ratings affected by this rating action
can be found on S&P Global Ratings' public website at
www.standardandpoors.com. Use the Ratings search box located in the left
column.

Primary Credit Analyst: Kimberly E Yarborough, New York (1) 212-438-1089;
kimberly.yarborough@spglobal.com
Secondary Contact: Tatenda Chirusa, Toronto + 1 (416) 507 2542;
tatenda.chirusa@spglobal.com


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