DBRS Confirms SCBCTA (TransLink) at AA, R-1 (middle), with Stable Trends

DBRS has today confirmed South Coast British Columbia Transportation Authority’s (TransLink or the Authority) Issuer Rating at AA, its Senior Unsecured Debt rating at AA and its Commercial Paper rating at R-1 (middle), all with Stable trends. TransLink and its municipal stakeholders continue to be challenged with finding new sustainable funding sources to address steadily rising service and capital requirements, as highlighted by the sixth consecutive DBRS-adjusted operating shortfall projected for 2013, after adjusting revenue for non-recurring items. However, TransLink’s taxing authority in an economically critical region, cautious management and sound governance structure lend support to the credit profile.

Despite commendable efforts to contain spending, rising demand pressures, wages and capital investments will likely continue to fuel steady spending growth going forward, resulting in limited budget flexibility. Passenger growth slowed to 2.4% in 2012, which is sound but below expectations, indicating that the notable upward trend in ridership observed in recent years is beginning to lose momentum. TransLink is actively engaging its key stakeholders including the Province of British Columbia (rated AA (high), with a Stable trend by DBRS) and the Mayors’ Council to identify new revenue sources. As a result of ongoing funding deficiencies and capital needs of $775 million over the next three years, DBRS-adjusted net debt (which reached $2.6 billion in 2012) will grow to $2.9 billion by 2015, or approximately $1,200 per capita, which is still well within the range for the rating category.

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

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 Canadian Municipal Governments, which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.