All trends are Stable. The ratings are supported by the solid long-term economic fundamentals of the catchment area and 407's sound cash flow generation and good operating efficiency but are tempered by the Company's sizable debt burden, leverage intentions, and constraints on future capacity expansions.
After growing 1.4% in 2018, traffic as measured by vehicle kilometres travelled declined 0.3% in the first nine months of 2019, reflective of a 1.1% decrease in the number of trips and a 0.8% increase in average trip length, compared with the corresponding period last year. The decline was mainly attributed to unfavourable weather conditions, offset by higher construction activity on alternate routes. DBRS Morningstar expects the Company to incur a small amount of congestion payments in 2019, which marks the first year that the Company makes such payments. For the full year, the Company projects an 8.3% increase in revenue and 9.6% increase in operating expenses, resulting in a projected 8.1% increase in EBITDA.
The Company incurred incremental borrowing of approximately
For the next three years till 2023, the Company currently plans to incur incremental leverage of approximately
Notes:
All figures are in Canadian dollars unless otherwise noted.
The principal methodology is Rating Public-Private Partnerships, which can be found on dbrs.com under Methodologies & Criteria.
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrs.com.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrs.com.
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Ratings
Date Issued Debt Rated Action Rating Trend Issued
i
US =
CA = Canada Issued, NRSRO
EU = EU Issued, NRSRO
E = EU endorsed
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Unsolicited Participating Without Access
Unsolicited Non-Participating
12-Dec-19 Issuer Rating Confirmed A Stb CA
12-Dec-19 Senior Bonds Confirmed A Stb CA
12-Dec-19 Subordinated Bonds Confirmed BBB Stb CA
12-Dec-19 Junior Bonds Confirmed A (low) Stb CA
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