DBRS Publishes Updated Income Funds Methodology

DBRS has today published an updated income funds methodology. This updated methodology has had no impact on any presently outstanding DBRS ratings. In June 2007, the Canadian federal government introduced legislation that comes into effect in 2011 whereby publicly traded income trusts in Canada will have to start paying taxes on their distributed earnings at rates approximating corporate income tax rates. DBRS expects that most publicly traded trust will convert to dividend-paying corporations. For those income trusts that are converted into a corporation, DBRS expects to discontinue the related stability rating. The income funds methodology would thus no longer be applicable and the newly formed corporation would be covered under the appropriate industry methodology.

Qualifying real estate income trusts (REITs), however, are exempt from the taxation and are not expected to convert. They will still be covered under the existing income fund methodology.

The methodology providing DBRS's processes and criteria is available by contacting us at info@dbrs.com.