DBRS Rates 407 International Inc. Debt Issue “A”, Stable

DBRS has today assigned a rating of “A”, with a Stable trend, to the $400 million Senior Notes (Series 12-A1) (the Notes) issued by 407 International Inc. (407 or the Company). The Notes are being issued from 407’s November 9, 2011, shelf prospectus.

The intended use of the proceeds from the Notes will be (i) to redeem the Company’s $200,000,000 5.10% Senior Bonds, Series 09-A2, due January 20, 2014; (ii) to fund the Series Reserve Account in the Debt Service Reserve Fund (as both terms are defined in the Indenture) in respect of the Notes; and (iii) for general corporate purposes. The financing is consistent with DBRS’s expectations incorporated in its July 26, 2011, confirmation of 407’s ratings.

The Notes will have a maturity date of April 25, 2042, and will rank pari passu with all other senior obligations of the Company. As a result, the rating is consistent with the ratings previously assigned by DBRS to the Company’s similarly ranked bonds outstanding.

For the quarter ended March 31, 2012, total trips and vehicle kilometres traveled were each up 0.5% over the same period in 2011, roughly in line with management’s expectations for growth to be essentially flat in 2012. As compared to Q1 2011, higher tolls drove a 9.5% revenue increase while operating expenses were in line, leading to net income that was roughly double that of Q1 2011 at $31.7 million.

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

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