Morningstar DBRS Confirms Credit Ratings on Mountain View Partners GP at A (low) With Stable Trends

DBRS Limited (Morningstar DBRS) confirmed the Issuer Rating and the $380.8 million Series A Bonds (the Bonds) rating of Mountain View Partners GP (MVP or ProjectCo) at A (low). Both trends are Stable. ProjectCo is the special-purpose entity (SPE) created to design, build, finance, operate, and maintain the Southwest Calgary Ring Road Project (the Project) under a 35-year project agreement (PA) with the Province of Alberta (the Province; rated AA with a Stable trend).

KEY CREDIT RATING CONSIDERATIONS
The Priority New Infrastructure (PNI) Traffic Availability was achieved on October 1, 2020, and the Remaining New Infrastructure (RNI) Traffic Availability on October 1, 2021, as scheduled. The Project achieved Construction Completion on December 2022.

The Project is in its 43th month of operations, and there have been no material payment deductions incurred to date. Full availability payments started on October 1, 2021, and will continue until the PA is either terminated or expires on September 30, 2051. ProjectCo retained lifecycle and handback obligations, as detailed in the PA, but passed down the operations and maintenance (O&M) work to Alberta Highway Services Ltd. (AHSL or the Operator) through a fixed-price O&M contract. Morningstar DBRS notes that the lifecycle obligation retained by ProjectCo introduces an element of risk to the Project. Although a three-year forward-looking rehabilitation reserve account was maintained since October 1, 2020, which mitigates some of the risk, persistently higher-than-expected traffic volume or faster-than-expected deterioration of the infrastructure could drive lifecycle costs up considerably (beyond the reserve amount), without any compensation coming from the Government of Alberta Ministry of Transportation (Alberta Transportation). If that were to occur, it could affect the financial metrics significantly. Morningstar DBRS believes this is unlikely to happen because, according to ProjectCo, heavy traffic has been much lower than what the road is designed for, which translates into lower rehabilitation costs. ProjectCo has mainly spent on asphalt patches, saving the unspent budget for future needs.

During August 2024, heavy rains affected one slope, causing a minor slide. Repairs were $130,000 higher than the budget.

The relationship with Alberta Transportation and AHSL remains positive.

CREDIT RATING DRIVERS
A material deterioration of the financial metrics may result in a negative rating action. Given the availability-based payment structure and little potential for meaningful improvement in the financial forecast, a rating upgrade is considered unlikely.

FINANCIAL OUTLOOK
For the 12-month operating period from October 2023 to September 2024 and the 12-month period from April 2024 to March 2025, the debt service coverage ratio (DSCR) was 1.22 times (x). The minimum DSCR was projected to be 1.20x, which is standard for availability-based public-private partnership (PPP) projects rated in the "A" range. The equity lockup DSCR is set as 1.135x, which is lower than is typically seen but is considered appropriate for the rating, given the O&M cost resilience of 45.4% and lifecycle cost resilience of 33.0%.

CREDIT RATING RATIONALE
The credit ratings reflect the Project's financial outlook, underpinned by strengths that include (1) low public-sector counterparty risk and (2) straightforward O&M requirements. The main challenge is due to ProjectCo retaining lifecycle and handback risk.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025), https://dbrs.morningstar.com/research/454196.

CREDIT RATING DRIVERS AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of Rating Driver Factors
In the analysis of MVP, the Rating Driver factors listed in the availability-based section of the methodology was approximately equal.

(B) Weighting of FRA Factors
In the analysis of MVP, the following FRA factor listed in the availability-based section of the methodology was considered more important: O&M/Lifecycle Break-Even Ratios.

(C) Weighting of the Rating Driver and the FRA
In the analysis of MVP, the FRA carries greater weight than the Rating Driver.

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

Morningstar DBRS applied the following principal methodology: Global Methodology for Rating Public-Private Partnerships (August 13, 2024), https://dbrs.morningstar.com/research/437820

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (February 3, 2025; https://dbrs.morningstar.com/research/447186), which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodology has also been applied:

Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025), https://dbrs.morningstar.com/research/454196

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

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 under Related Documents or by contacting us at info-DBRS@morningstar.com.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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