DBRS Reinstates Strait Crossing Development Inc. at BBB (low), Stable Trend

DBRS Limited (DBRS) has today reinstated the BBB (low) rating and Stable trend on Strait Crossing Development Inc.’s (SCDI) 6.17% Revenue Bonds. DBRS notes that the rating is being reinstated at the request of the issuer.

After relatively poor traffic results were received in Q1 2015, volumes rebounded meaningfully in Q2 2015 to 173,914 vehicles, which is 3.2% ahead of last year and 1.1% higher than budgeted. The revenue impact was more significant, with total revenues for Q2 2015 of $8.7 million, 4.9% higher than the prior year period and 1.7% higher than budget. On a year-to-date basis, traffic volume reached 283,696 vehicles, which was 0.8% lower than for the comparable period last year and also 2.1% below budget. Notwithstanding, revenues strengthened to $14.3 million, which is 0.8% higher year over year but still 1.5% under budget. At the end of Q2 2015, the balance of the Debt Service Reserve Account and the General Revenue Account are $12.5 million and $33.5 million, respectively. Together, these reserves can cover roughly 1.9 years of debt servicing, a slightly longer period than last year.

Despite the rebound in the second quarter, DBRS remains concerned with traffic performance and the relatively weak DSCR of 1.11x on a trailing twelve months basis, and will continue to monitor the credit for further material degradation. DBRS views a DSCR of 1.10x as the threshold level for the rating and if breached by SCDI, negative rating action would be likely.

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 Public-Private Partnerships, which can be found on our website under Methodologies.

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