Fitch Rates Cameron LNG's $2.915B Senior Secured Debt 'A-'; Outlook Stable

NEW YORK--()--Fitch Ratings has assigned a rating of 'A-' to Cameron LNG's (Cameron) $2.915 billion senior secured debt. Cameron benefits from low margin volatility anchored by availability-based tolling agreements with costs passed through to the revenue counterparties. The rating is supported by substantial mitigation of completion risk and is consistent with Fitch's view of the credit quality of the lowest rated toller. The Rating Outlook is Stable. A full rating report is available at www.fitchratings.com.

KEY RATING DRIVERS

Strong Mitigation of Completion Risk- Completion Risk: Stronger

Development of the 13.5 metric tons per annum (MTPA) liquefied natural gas (LNG) facility is backed by a fixed-price, date-certain construction agreement from experienced contractors. Cameron also benefits from investment-grade guarantees in which sponsors pledge on a several basis to repay all senior debt obligations if completion, based upon specified tests, is not achieved by September 2021.

Stable Projected Operations, Full Cost Pass-Through- Operating Risk: Stronger

Operating risk is mitigated by the use of proven technology with numerous applications worldwide. The tollers' absorption of 100% of all operating and maintenance costs and Cameron's redundant equipment reduce the impact of potential forced outages. The ability to adjust the targeted annual amount of LNG production at the start of each budget year provides additional risk mitigation.

No Supply Risk- Supply Risk: Stronger

Cameron has no exposure to the potential variability in supply or cost for feedstock as the tollers are responsible for procuring feed gas for LNG operations.

Stable Contracted Revenues- Revenue Risk: Stronger

Long-term availability-based tolling agreements with three investment-grade tollers eliminate volume and price risk. The tariff increases to moderate the impact of additional debt that may be incurred due to rising capital costs during construction. There is a seven-and-a-half-year tail to generate additional contracted cash flow after debt maturity and contract termination risk is low.

Manageable Debt Structure- Debt Structure: Midrange

The total $7.415 billion senior secured debt (including the rated debt) is fully amortizing. Cameron has 50% of its senior debt exposed to variable interest rates. Additional leverage is limited by covenants to support debt service coverage ratios (DSCRs) of at least 1.50x, relying on incremental equity contributions committed by the sponsors to offset potential construction cost overruns.

Resilient Cash Flow

Under a combination of stressed LIBORs, increased capital expenditure and conservative plant availability, the Fitch rating case projects a DSCR profile averaging 1.81x with a minimum of 1.51x. A robust 2.48x project life coverage ratio in Fitch's rating case further demonstrates Cameron's strong credit profile.

RATING SENSITIVITIES

Counterparty Risk: Downgrade of any sponsor through project completion could result in a downgrade of Cameron. Downgrade of any toller would result in a downgrade of the project.

Variable Operating Performance: Unstable plant performance that reduces tariff payments could result in a downgrade.

Increasing Debt Burden: LIBOR that is persistently higher than what is modeled in Fitch's rating case financial analysis, materially reducing DSCRs, would result in a downgrade.

Completion Challenges: Material delays, cost overruns or performance shortfalls resulting in reduced financial cushion may put pressure on the rating.

TRANSACTION SUMMARY

Cameron is to contain three equally sized trains with a total nameplate capacity of 13.5 MPTA to liquefy U.S. natural gas for export. LNG output of 12 MTPA is contracted under three long-term tolling agreements with GDF SUEZ S.A. and two subsidiaries whose obligations are backed by parent guarantees from Mitsubishi Corporation and Mitsui & Co., Ltd. Cameron will connect to the Cameron Interstate Pipeline, separately owned and upgraded by Sempra Energy ('BBB+'/Stable Outlook) and Columbia Gulf Transmission Pipeline.

Cameron will be a bidirectional facility capable of liquefaction and regasification of LNG for import and export upon commercial operation of the liquefaction facilities and with the existing regasification terminal.

Cameron LNG will be indirectly owned by Sempra Energy (50.2%), GDF SUEZ S.A. (16.6%), Mitsui & Co., Ltd. (16.6%), and Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha (NYK) under a joint venture (16.6%, Mitsubishi owns approximately 11% and NYK owns approximately 5%).

Total debt of $7.415 billion will be used to design, build, and operate the liquefaction LNG facilities and operate the existing regasification facilities. Total debt is provided by Japan Bank for International Cooperation ($2.500 billion), commercial banks insured by Nippon Export Investment and Insurance ($2.000 billion) and the rated loans provided by commercial banks ($2.915 billion).

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Rating Criteria for Infrastructure and Project Finance' (July 12, 2012);

--'Rating Criteria for Thermal Power Projects' (June 30, 2014);

--'Rating Criteria for Availability-Based Projects (June 18, 2013);

--'Criteria for Interest Rate Stresses in Structured Finance Transactions' (Dec. 19, 2014).

Applicable Criteria and Related Research: Cameron LNG, LLC

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=837608

Rating Criteria for Infrastructure and Project Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682867

Rating Criteria for Thermal Power Projects

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=753208

Rating Criteria for Availability-Based Projects

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=710784

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=959236

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Yvette Dennis, +1-212-908-0668
Senior Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Andrew Joynt, +1-415-732-5622
Associate Director
or
Committee Chairperson
Gregory Remec, +1-312-606-2339
Senior Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Yvette Dennis, +1-212-908-0668
Senior Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Andrew Joynt, +1-415-732-5622
Associate Director
or
Committee Chairperson
Gregory Remec, +1-312-606-2339
Senior Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com