Research Update: 407 International Inc.'s Ratings Placed On CreditWatch Negative Amid Slower Traffic Recovery As COVID-19 Cases Surge

Since our last review in May 2020, the traffic on 407 International Inc. has failed to recover to our expected levels because of delayed return to work policies, more parents than initially expected choosing online schools, and prolonged lockdown with a surge in COVID-19 cases. We expected that traffic would recover to about 85% of 2019 actual traffic by September 2020; however, the traffic has recovered to only about 60%. Although we have not yet updated our traffic and revenue forecast (which we expect to complete over the coming weeks), we anticipate that recent containment measures following second wave may decrease traffic further and we expect it could likely remain around this level until second of half of 2021 when

...- Since our last review in May 2020, the traffic on 407 International Inc. has failed to recover to our expected levels because of delayed return to work policies, more parents than initially expected choosing online schools, and prolonged lockdown with a surge in COVID-19 cases. We expected that traffic would recover to about 85% of 2019 actual traffic by September 2020; however, the traffic has recovered to only about 60%. Although we have not yet updated our traffic and revenue forecast (which we expect to complete over the coming weeks), we anticipate that recent containment measures following second wave may decrease traffic further and we expect it could likely remain around this level until second of half of 2021 when we expect the vaccine will be widely available. - As a result, 407 International's cash flows would likely remain materially depressed and debt service coverage ratios (DSCRs) substantially below our rating expectations. We now estimate the project's DSCR to be around...

Research Update