DBRS Rates Reliance LP Senior Secured Notes Issue at BBB, Under Review with Developing Implications

DBRS has today assigned a rating of BBB, Under Review with Developing Implications, to Reliance LP’s (Reliance) issuance of $200 million Senior Secured Notes (the Notes), maturing August 2, 2021. The Notes settled on August 1, 2014.

The Notes will rank pari passu in right of payment with all of Reliance’s other secured obligations, and the proceeds from the sale of the Notes will be used to repay existing indebtedness under the senior secured credit facility.

Notes:
All figures are in Canadian dollars unless otherwise noted.

DBRS’s rating on Reliance LP (Reliance or the Company) is based on the DBRS methodology Rating Companies in the Consumer Products Industry (October 2013). However, DBRS views Reliance’s strong franchise as having a superior business risk profile than that of a traditional consumer products company. As a result, the Company is able to manage higher leverage metrics.

Overall, in DBRS’s assessment of the credit quality of Reliance, DBRS factors in the following key items: (1) competition arising from regulatory changes, (2) effects of attrition on customer base, (3) stability of cash flow generated from customer base, (4) flexibility to increase rental rates, (5) limited operational risk through a co-ownership agreement and (6) dependency on new home developments for growth.

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