Mattamy Group Corp.

The stable outlook reflects our view that Mattamy Group Corp. will consistently maintain leverage at about 3x on a year-over-year basis. Over the next 12 months, we expect 10%-12% home closing growth during the company's fiscal 2019, with strengthening performance and increasing market share in Ottawa, Alberta, and the U.S. providing balance to a continued slowdown in the GTA, driving revenue growth and stable gross margins. We do not believe a downgrade is likely over the next 12 months. However, we may consider lowering the rating if the company's leverage consistently remains above 4x. This could occur if Mattamy engages in aggressive debt-financed land spending, or if a pronounced slowdown in the GTA occurs, causing a reduction in sales and

...Mattamy holds the leading market share in the Greater Toronto Area, the largest housing market in Canada. In S&P Global Ratings' view, Mattamy Group Corp.'s position in the GTA, Canada's largest market, gives it a competitive advantage over its peers due to government-imposed land development constrictions, and Mattamy's ample supply of land in the region. This combination not only will support the company's long-term growth but make it increasingly difficult for competitors to expand their operations in the GTA. However, we note that this exposes Mattamy to concentration risk, and a housing downturn in the Canadian markets, particularly in the GTA, could drastically affect Mattamy's earnings and credit ratios. We view the company's diversification on both sides of the border as a positive for its rating. Compared to most of its rated homebuilding peers, Mattamy has the distinction of having operations in both Canada and the U.S. This could provide some hedge to mitigate a slowdown in one...

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