DBRS Assigns Rating of BBB (low) with a Stable Trend to Reliance LP’s 3.836% $400 Million Senior Secured Notes

DBRS Limited (DBRS) assigned a rating of BBB (low) with a Stable trend to Reliance LP’s (Reliance or the Company; rated BBB (low) with a Stable trend by DBRS) 3.836% $400 million Senior Secured Notes (the Notes) maturing March 15, 2025. The Notes settled on December 18, 2017.

The Notes will be senior secured obligations of Reliance and will rank pari passu in right of payment with all other secured obligations. Net proceeds from the sale of the Notes will be used to repay in full all indebtedness outstanding under the term loan credit agreement entered into by the Company in December 2016 and to repay, in part, indebtedness outstanding under the Senior Secured Bank Facility.

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

The principal methodology is Rating Companies in the Consumer Products Industry (August 2017), which can be found on dbrs.com under Methodologies. 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 the customer base, (3) stability of cash flow generated from the customer base, (4) flexibility to increase rental rates and (5) dependency on new home developments for growth.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

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