Research Update: 407 International Inc.'s Subordinated Debt Rated 'BBB'; Other Ratings Affirmed; Outlook Stable

407 International Inc. is issuing 4.22%, C$350 million in subordinated secured notes due in 2028 and 4.45%, C$325 million in subordinated secured notes due in 2031. It will use the proceeds to fund expenditures, debt service payments, tax payments, and general corporate purposes including distributions and to repay the C$300 million subordinated secured notes due in September 2022. We assigned our 'BBB' ratings to the new subordinated secured notes. We also affirmed our 'A' ratings on the company's senior debt, 'A-' ratings on the junior debt, and 'BBB' ratings on its existing subordinated debt. The outlook is stable. The rating action reflects our view that 407's credit metrics support modest additional subordinated leverage despite the lack of a dedicated reserve

...- 407 International Inc. is issuing 4.22%, C$350 million in subordinated secured notes due in 2028 and 4.45%, C$325 million in subordinated secured notes due in 2031. It will use the proceeds to fund expenditures, debt service payments, tax payments, and general corporate purposes including distributions and to repay the C$300 million subordinated secured notes due in September 2022. - We assigned our '###' ratings to the new subordinated secured notes. We also affirmed our 'A' ratings on the company's senior debt, 'A-' ratings on the junior debt, and '###' ratings on its existing subordinated debt. The outlook is stable. - The rating action reflects our view that 407's credit metrics support modest additional subordinated leverage despite the lack of a dedicated reserve for subordinated debt and remaining uncertainties such as slower traffic recovery than some peers and the overall macroeconomic environment. - Our forecast continues to assume traffic will only recover to 90% of 2019 levels...

Research Update