DBRS Morningstar Assigns BBB Ratings to 407 International Inc.’s New Issues

DBRS Limited (DBRS Morningstar) assigned a rating of BBB to the $350 million Series 22-D1 Subordinated Medium-Term Notes (the Series 22-D1 Notes) and to the $325 million Series 22-D2 Subordinated Medium-Term Notes (the Series 22-D2 Notes; together with the Series 22-D1 Notes, the Notes) of 407 International Inc. (407 or the Company). Both trends are Negative.

The Notes have been issued pursuant to the 45th supplemental indenture dated March 31, 2022. The ratings being assigned are based upon the rating of an already-outstanding series of the above-mentioned debt instrument. The issuance of the Notes is in line with DBRS Morningstar’s expectation incorporated in the rating confirmation on June 16, 2022. The intended use of proceeds from the issuance of the Notes is (1) to refinance the Company’s existing Series 17-D1 Subordinated Bonds and (2) for general corporate purposes.

The Series 22-D1 Notes and the Series 22-D2 Notes mature on February 14, 2028, and August 14, 2031, respectively, with semiannual fixed interest rate payments. The Notes rank pari passu with all other secured subordinated indebtedness of 407. Correspondingly, the BBB ratings and Negative trends are consistent with the rating and trend currently assigned to the Company’s Subordinated Bonds.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

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

The principal methodology is Global Methodology for Rating Public-Private Partnerships (August 30, 2022; https://www.dbrsmorningstar.com/research/402155), which can be found on dbrsmorningstar.com under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (May 17, 2022; https://www.dbrsmorningstar.com/research/396929).

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

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

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