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Investing.com -- Moody’s Ratings has upgraded Venture Global Calcasieu Pass, LLC’s (VGCP) senior secured notes to Ba1 from Ba2, with the outlook revised to stable from positive.
The upgrade affects approximately $4.75 billion of debt securities and comes after VGCP completed corrective work on its power island and pre-treatment systems, allowing the company to declare commercial operability under all existing Sale and Purchase Agreements (SPAs).
VGCP now operates under six separate 20-year foundation SPAs totaling 8.5 MTPA of liquefaction capacity and two medium-term SPAs totaling 1.5 MTPA. The foundation SPAs generate contracted fixed payments of approximately $850 million annually, while including the medium-term SPAs brings the total to over $1.0 billion. These payments exceed expected operating and financing costs and must be paid regardless of whether counterparties lift cargoes.
The weighted average credit profile of the six foundation SPA off-takers falls in the high Baa/low A range. Major customers include BP (NYSE:BP) Gas Marketing Ltd (guaranteed by BP p.l.c., A1 stable) and Shell NA LNG, LLC (guaranteed by Shell USA, Inc., Aa3 stable). Other off-takers include ORLEN S.A. (A3 stable), Edison S.p.A (Baa3 stable), and affiliates of Repsol (OTC:REPYY) S.A. (Baa1 stable) and Galp.
VGCP has also secured additional capacity contracts, including a three-year, 1.0 MTPA agreement with Sinopec (OTC:SHIIY) subsidiary Unipec and a five-year, 0.5 MTPA deal with a CNOOC (NYSE:CEO) affiliate.
The company has been producing commissioning cargos since 2022, but recently completed corrective work on its power island enabled it to pass the required Lender Reliability Test while serving all contractual counterparties without operational issues.
Despite these positive developments, the rating remains constrained by ongoing arbitration proceedings initiated by seven VGCP customers who claim the company delayed declaring commercial operability. The customers are seeking damages exceeding $1.0 billion, with some rulings expected in late 2025. VGCP disputes these claims, maintaining that commercial operation could only be declared after all facilities were completed and commissioned.
Moody’s noted that without this arbitration uncertainty, VGCP would display investment-grade credit characteristics. The company is expected to generate annual EBITDA of approximately $700 million under existing contracts.
VGCP is majority owned by Venture Global LNG, Inc., which carries a B1 CFR rating with a positive outlook.
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