DBRS Morningstar Confirms Ratings on New Brunswick (F-M) Project Company Inc. at A (high), Stable

DBRS Limited (DBRS Morningstar) confirmed its ratings on the Highway Bonds and the Tranche A and Tranche B Senior Toll-Based Debt (collectively, the Senior Debt) of New Brunswick (F-M) Project Company Inc. (NBFM or the Company) at A (high) with Stable trends. This rating confirmation follows DBRS Morningstar’s confirmation of its ratings on the Province of New Brunswick (the Province) at A (high) with Stable trends on May 8, 2020. The ratings on the Senior Debt are a flow-through of the Province’s long-term rating as the New Brunswick Highway Corporation, a provincial Crown agent, directly funds the principal and interest payments on the Senior Debt. Although the transaction is structured as a public-private partnership (PPP), revenue available to service the Senior Debt is not subject to traffic volumes or abatement for the Company’s performance and continues if the route is unavailable. Debt servicing also survives termination of the Company under the Project Agreement.

In its May 8, 2020, press release, “DBRS Morningstar Confirms Province of New Brunswick at A (high), Stable Trend,” DBRS Morningstar noted the Province's progress in recent years to restore fiscal balance and reduce debt, leaving the Province in a much better position entering the Coronavirus Disease (COVID-19) pandemic. DBRS Morningstar also stated that it may consider negative rating action on the Province with a sustained deterioration in the Province’s operating results and marked increase in the debt-to-GDP ratio beyond the levels outlined in the press release and/or NB Power’s failure to reduce leverage, in which case DBRS Morningstar would no longer treat NB Power as self-supported. Also, a positive rating action is considered unlikely on the Province as its ratings are constrained by its weak economic fundamentals.

NBFM is a not-for-profit corporation created to design, build, finance, operate, and maintain a portion of the Trans-Canada Highway between Fredericton and Moncton in New Brunswick under a 30-year PPP structure.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

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

The principal methodology is Rating Public-Private Partnerships (August 23, 2019), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

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.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

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.dbrsmorningstar.com or contact us at [email protected].

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