DBRS Downgrades Hospital Infrastructure Partners (NOH) Partnership

DBRS Limited (DBRS) has today downgraded the Series A Senior Secured Bonds issued by Hospital Infrastructure Partners (NOH) Partnership (ProjectCo) to BBB (high) from A (low). The rating remains Under Review with Negative Implications, as the extent of some issues and their resolution are still being investigated.

The rating action reflects the continuation of operating issues that led DBRS to put the rating Under Review with Negative Implications on May 24, 2016. While some progress has been made in the interim period through the concerted efforts of all major project parties, issues that were previously thought to be relatively manageable continue to be of some concern, resulting in elevated failure points on a rolling basis. A confidentiality agreement precludes DBRS from disclosing in greater detail issues that factored into its assessment. However, in general terms, there appear to be ongoing issues related to operations, performance measurement, performance monitoring and reporting and timeliness of response. This outcome is inconsistent with DBRS’s expectations for A (low)–rated hospital public-private partnership transactions and its original understanding that the services to be performed are of relatively low complexity.

DBRS acknowledges that while the above-mentioned issues are material, they are expected by ProjectCo to be short term in nature. Nonetheless, DBRS would expect the facility to be operated until at least July 31, 2017, without any material adverse incidents and with only modest accumulation of payment deductions or failure points before reconsidering its views on the rating. In the event that material payment deductions or failure points continue for a prolonged period or worsen, DBRS notes that further negative rating action is possible.

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.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.