DBRS Morningstar Confirms Plenary Health Bridgepoint LP at “A” with a Stable Trend

DBRS Limited (DBRS Morningstar) confirmed the Issuer Rating and Senior Amortizing Bonds (Series A) rating of Plenary Health Bridgepoint LP (ProjectCo) at “A.” All trends are Stable.

ProjectCo is the special-purpose vehicle to design, build, finance, and maintain a new 472-bed hospital (the Project) and refurbish the adjacent historic Don Jail for administrative purposes under a 33.6-year Project Agreement (PA) with Bridgepoint Hospital (the Hospital), one of the Province of Ontario’s (rated AA (low) with a Stable trend by DBRS Morningstar) largest complex-care institutions. ProjectCo’s responsibilities have been largely passed down during the service phase to Johnson Controls Canada LP (JCLP) under an indexed fixed-price contract.

The operating and financial performance of the Project remain relatively stable since the start of operations in 2013. JCLP is continuing to perform in accordance with the PA with minimal incurrence of failure points and deductions. ProjectCo indicated that it did not incur any unexpected lifecycle costs in 2019 and no major lifecycle works are scheduled for 2020. Furthermore, ProjectCo expects the actual energy consumption for the year ended June 2019 to be lower than the annual target level and will pass any associated energy gainshare down to JCLP.

For the last 12 months ended August 2019, ProjectCo’s senior debt service coverage ratio (DSCR) was 1.21 times (x). ProjectCo is projecting a senior DSCR of about 1.21x for the year ending August 2020. ProjectCo’s operating and maintenance (O&M) and lifecycle resiliencies of 78% and 87%, respectively, are considered strong for the ratings and provide it with more capacity to absorb any potential O&M and lifecycle cost increases.

DBRS Morningstar could take negative rating action if ProjectCo experiences considerable operational challenges resulting in a material accumulation of failure points. DBRS Morningstar believes a positive rating action is unlikely given the fixed revenue stream from the Hospital and the fixed-priced Facilities Management Contract with JCLP.

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

The principal methodology is Rating Public-Private Partnerships, which can be found on dbrs.com under Methodologies & Criteria.

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 under Related Documents or by contacting us at [email protected].

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

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at [email protected].

For more information on this credit or on this industry, visit www.dbrs.com or contact us at [email protected].

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