DBRS Assigns Rating of Pfd-3 (low) to ECN Capital’s Preferred Share Issuance, Series C, Trend Stable

DBRS, Inc. (DBRS) has today assigned a rating of Pfd-3 (low) to the C$100 million 6.25% Cumulative Five-Year Minimum Rate Reset Preferred Shares, Series C (the Preferred Shares) issued by ECN Capital Corp. (ECN or the Company). The trend on the Preferred Shares is Stable. The proceeds from the Preferred Shares are expected to be used by ECN to originate and finance, directly and indirectly, finance assets, to fund future acquisitions, and for general corporate purposes.

The rating reflects the Company’s solid franchise as a leading commercial lender and lessor in North America with strong origination platforms and sound risk management across multiple asset classes. The rating also considers the solid earnings generation derived from the franchise, producing more than sufficient pre-provision earnings to absorb the cost of credit with a solid cushion to absorb potentially higher losses that would be expected through the cycle, as well as unexpected losses. Funding is appropriate and aligned with the asset base, while leverage is considered low compared to peers. The Company’s reliance on secured forms of wholesale funding and execution risks associated with the Company’s evolving strategy to become more “asset-lite”, as well as the potential for entry into new business activities currently constrain the ratings.

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

The applicable methodologies are Global Methodology for Rating Finance Companies (October 2016) and DBRS Criteria: Preferred Shares and Hybrid Security Criteria for Corporate Issuers (December 2016), which can be found on our website under Methodologies.

The primary sources of information used for this rating include company documents and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.