Ottawa River’s Power to Generate Cash Outweighs Credit Downgrade
- Hydro Ottawa still ‘very solid investment-grade company’
- S&P says push into unregulated power is ‘riskier business’
The Ottawa River that enriched generations of lumber barons and political bosses is now valued for its electric power, with investors betting that cash stream will remain strong even after the city hydro company’s debt was downgraded for the second time in a year.
Hydro Ottawa Holding Inc.’s rating was cut last month by S&P Global Ratings to BBB+, still three steps above junk but its lowest grade since 2003. That affects the C$575 million ($437 million) of bonds in four issues that have been sold by the utility owned by the city government of Canada’s capital. Investors in the company’s largest bond, a C$200 million offering due in 2025, so far haven’t felt the pain of the downgrade, with a return of 2.8 percent this year that’s in line with the 2.7 percent on similar federal government debt.