DBRS Confirms SCBCTA (TransLink) at AA, R-1 (middle), Stable Trends

DBRS has today confirmed the Issuer Rating and Senior Unsecured Debt rating of the South Coast British Columbia Transportation Authority (TransLink) at AA, along with its Commercial Paper rating at R-1 (middle). All trends are Stable. As a result of new legislation passed by the Province of British Columbia (the Province; rated AA (high) with a Stable trend by DBRS) in June 2014, TransLink is operating under a new governance structure, which continues to promote prudent financial planning and maintains TransLink’s taxing authority in an economically critical and affluent region of the Province.

After several years of solid performance, ridership growth lost momentum in 2013, falling by 2.1%. Despite fewer passengers, TransLink reported a DBRS-adjusted operating surplus of $38.9 million in 2013 – the first in six years − after adjusting for non-recurring items. This was considerably better than budgeted, supported by lower-than-planned spending, including delays experienced in the implementation of the new electronic fare system and the realization of operating efficiencies. Based on first half results in 2014, it appears that this trend will continue, with only a small deficit anticipated for the year. Nevertheless, the operating environment is expected to remain tight, with a return to only modest DBRS-adjusted surpluses projected over the ten-year planning horizon.

In June 2014, the Mayors’ Council announced a new vision, which entails $7.5 billion in new capital investment over ten years and includes a new Patullo Bridge, light rail transit in Surrey and Langley, extension of the Millennium subway line and new rapid bus lines, among other enhancements. Funding for the plan is based upon a reliance on contributions from senior governments, increased transit revenues as a result of expanded ridership, tolls and a combination of new funding sources still to be identified. The provincial government has mandated a public referendum to help guide future funding decisions, which is expected to take place in the first half of 2015. Pending the outcome of the referendum and formal adoption of a new investment plan, the 2014 Base Plan will continue to guide investment, with DBRS-adjusted debt expected to reach $3.1 billion in 2017, or roughly $1,200 per capita. This remains consistent with DBRS’s expectations and is comfortably within the thresholds for the current rating category.

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

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.

The applicable methodologies are Rating Canadian Municipal Governments and DBRS Criteria: Commercial Paper Liquidity Support for Non-Bank Issuers, which can be found on our website under Methodologies.

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