DBRS Changes Trend of 407 East Development Group to Negative

DBRS has today confirmed its rating of 407 East Development Group General Partnership (ProjectCo) at A (low), although the trend has been changed to Negative from Stable.

The trend change stems from today’s downgrade and maintenance of the Negative trend of SNC-Lavalin Group Inc. (SNC), one of the Design-Build Contractor Guarantors for the 407 east extension project. In its rating confirmation of August 28, 2013, DBRS noted that the construction security package, consisting of a 10% letter of credit, was in excess of that necessary for the rating and could allow the project to absorb a potential one-notch downgrade in the rating of SNC. However, the impact of the one-notch downgrade and the continuation of the Negative trend on the rating of SNC-Lavalin Group Inc. have exceeded the flexibility provided by the security package, necessitating the trend change at the ProjectCo level.

DBRS expects that the trend could be revised to Stable once construction has been successfully completed, or prior to such completion if the trend of SNC-Lavalin Group Inc. were revised to Stable and the project’s construction progress remained materially on schedule.

Notes:
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 to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodology is Rating Public-Private Partnerships, which can be found on our website under Methodologies.