19
19
Origin Invest Project Finance
January 2010
Summary of Rating Drivers
Below are the main factors considered by Origin when rating projects and the ranges generally associated
with each rating category. It should be noted that the various aspects of a project are often inter- related
and interactive and should be assessed holistically, not in isolation.
Project Risks - Critical Factors
Rating
Strength
CONSTRUCTION PERIOD (if applicable)
A
Superior
BBB
Adequate
BB
Weak
Construction Complexity
· Proven technology;
predictable construction
process and costs.
· Proven technology. · Relatively new technology
or complex construction
process.
Risk Allocation
· Experienced contractor(s)
of strong credit quality.
· Robust fixed-price,
turnkey EPC contract with
comprehensive protection
against delay, cost
overruns and performance
defects.
· Experienced contractor
of reasonable credit
strength.
· Reasonable contract
protections against
delay, cost overruns and
performance defects.
· Contractor with weaker
credit quality.
· Weak or no protection
against delay, cost
overruns or performance
defects.
OPERATING PERIOD
Revenue/Off-take Agreement
· Stable and predictable
revenues.
· Contracts with strong
off-takers or a consistent
high-margin competitive
position from un-
contracted sales.
· Revenues are quite
resilient to resource
variability.
· Highly achievable
performance thresholds
and low expectation
of material adverse
penalties.
· Reasonably stable and
predictable revenues.
· Contracts with off-takers
of acceptable credit
quality, or a reasonably
consistent high-margin
competitive position from
un-contracted sales.
· Revenues are resilient to
resource variability.
· Reasonably achievable
performance thresholds
and low to moderate
expectation of material
adverse penalties.
· Less stable and
predictable revenues
owing to volume or price
variability.
· Contracts with weak
off-takers or off-taking
contracts, or revenues
exposed to lower-margin
competitive position.
· Revenues are less resilient
to resource variability.
· Onerous performance
thresholds and high
expectation of material
adverse penalties.
Competitiveness and Input
Costs
· Superior competitive
position providing strong
economic rationale for the
contracts and resulting in
predictable profitability
even without contracts.
· Reasonable cost-
competitiveness protected
by some degree of barrier
to entry.
· Weak or no competitive
advantage.
· Potential erosion of
competitiveness in a
market equilibrium
process.