...January 12, 2024 TORONTO (S&P Global Ratings) Jan. 11, 2023--S&P Global Ratings today said that 407 International Inc.'s proposed weighted-average toll increase of 15% (based on our calculation) is neutral for the company's credit quality. The increase is expected to take effect in February. This will be 407's first toll increases since 2020, when the pandemic began. The concession agreement between 407 and the Ministry of Transportation of Ontario (MTO) permits tolls to be raised without limit. However, 407 is required to maintain certain traffic volumes on the toll road. An inability to maintain these volumes (i.e. inability to resolve congestion on alternative roads) during specific peak periods can result in a congestion payment payable to the MTO. Before 2020, 407 was able to consistently raise toll rates by 9%-10% every year, largely without incurring a congestion payment due to the essentiality of the 407 to Toronto commuters. Given that demand has been largely inelastic, 407 has...
