Characteristics of Availability-Based Projects in Project Finance
The threshold for DBRS Morningstar to categorize a project as an Availability-Based Project for a project finance transaction under its Rating Project Finance methodology is extremely high. The structure and risk allocation regime under the contract is used to determine if the project falls under the Availability-Based Project category. DBRS Morningstar expects that virtually all key risks, such as revenue risks and operations and maintenance cost (including capex) risks, should substantially be transferred to the contract counterparty/offtaker, and any residual risks should have an extremely low probability of occurrence or show extremely high resiliency for a project to be considered an Availability-Based Project. All else being equal, an Availability-Based Project can achieve a higher credit rating as compared with a Volume-Based Project with the same financial metrics.
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