S&P Global Ratings has assigned a preliminary 'BBB' rating to a proposed $110 million bond issuance by Carbon Cycle North Carolina LLC (C2NC), an anaerobic digestion facility in Duplin County that converts organic waste into biomethane.
The rating, which carries a stable outlook, reflects S&P's expectation that the project will ramp up to 90% of design capacity by May 2026, underpinned by what the agency describes as a strong contractual foundation with investment-grade counterparties.
C2NC processes agricultural, industrial and commercial feedstocks — including swine and poultry waste — to produce renewable natural gas (RNG) and residual digestate.
The facility is designed to handle around 555,000 metric tonnes of feedstock per year, producing 4,860 MMBtu per day of RNG. Gas is sold to Duke Energy Carolinas and BP Energy via an on-site Piedmont natural gas pipeline connection.
The proposed 15-year bonds will refinance an existing bridge loan and cover additional operating expenses, with full amortisation within the contract life and an interest-only period during the first two years to ease the ramp-up phase.
S&P noted that approximately 80% of project revenue is secured under 15-year offtake contracts with Duke and BP at fixed prices, with waste-processing fees and production tax credits accounting for most of the remainder.
The agency said it does not consider the project exposed to significant market or resource risk, citing high feedstock redundancy and competitive waste-processing pricing.
The facility is currently producing around 1,400 MMBtu per day and S&P said historical commissioning issues have been resolved.
However, the agency applied a negative adjustment to its rating to account for the absence of a long-term operational track record.
It forecasts a minimum debt service coverage ratio (DSCR) of 1.78x, and said a negative rating action could follow if full production is not reached in 2026 or if the minimum DSCR falls below 1.6x.
S&P assigns investment-grade rating to North Carolina biogas bond issue
