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

DBRS Limited (DBRS) has today 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 a Stable trend, following the confirmation of the ratings of the Province of New Brunswick (the Province) with a Stable trend on April 1, 2016. The ratings on the Senior Debt are a flow-through of the long-term rating of the Province, as the principal and interest payments on the Senior Debt are funded directly by the New Brunswick Highway Corporation (NBHC), a provincial Crown agent. 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 in the event that the route is unavailable. Debt servicing also survives termination of the Company under the Project Agreement.

As noted in its press release of April 1, 2016, DBRS believes that the Province’s fiscal recovery plan outlined in its current budget is achievable. However, DBRS notes that the return to balance has been delayed until fiscal year 2021, and much will depend on ongoing political will to implement the plan and economic performance evolving as expected or better. There is limited flexibility within existing ratings of the Province to withstand any further deterioration without negatively impacting its ratings, which in turn, would impact the ratings of NBFM.

NBFM is a not-for-profit corporation charged with the operation of a four-lane highway (the Highway) between Fredericton and Moncton under a PPP structure. The Company has entered into a 30-year concession from NBHC to design, build, finance, operate, rehabilitate and maintain the Highway.

Notes:
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 to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is Rating Public-Private Partnerships, which can be found on our website under Methodologies.