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15 Feb 2011
Approximately $2,250 million of debt securities affected
Toronto, February 15, 2011 -- Moody's Investors Service today affirmed the Aa2 (senior secured) and
Aa3 (Unsecured) rating for NAV CANADA and maintained the stable outlook.
It also assigned a Aa3 rating to the proposed 10 year $250 million
senior unsecured general obligation note issue. The proceeds of
the note issue will be used to repay the maturing February 24, 2011
$250 million general obligation notes.
The rating affirmation takes into account the improvements in NAV CANADA's
traffic volumes since the early part of 2010 that are expected to be sustainable
and result in positive trends for the company's financial position.
The rating affirmation also acknowledges the company's ability to mitigate
the impact of the 09-10 recession on its financial position and
its adequate liquidity by way of approximately $260 million in
cash and $349 million available for unrestricted uses under its
$683 million credit facility due May 2012. In addition,
NAV CANADA has improved its situation with respect to the pension fund
deficit which will translate into reduced funding requirements in the
next two years.
The rating outlook is stable reflecting the positive signs in evidence
in the air transportation industry as well as an expectation that NAV
CANADA will maintain an adequate level of liquidity and will ultimately
take the necessary rate actions that are necessary to maintain its financial
- Senior Secured 7.56% amortizing revenue bonds maturing
March 1, 2027: $425 million
- Senior Secured 7.4% revenue bonds maturing June
1, 2027: $250 million
- Senior Unsecured 4.428% general obligation notes
maturing February 24, 2011: $250 million
- Senior Unsecured 3.434% general obligation notes
maturing April 17, 2012: $250 million
- Senior Unsecured FRN maturing April 29, 2013: $250
- Senior Unsecured 4.713% general obligation notes
maturing February 24, 2016: $450 million
- Senior Unsecured 5.304% general obligation notes
maturing April 17, 2019: $350 million
The principal methodology used in this rating was Government-Related
Issuers: Methodology Update published in July 2010.
The last rating action was on February 16, 2006 when the rating
for the senior secured notes was upgraded to Aa2 and the unsecured notes
were assigned a Aa3 rating.
In accordance with Moody's GRI rating methodology, the Aa2 senior
secured rating assigned to the debt issued under the Master Trust Indenture
(MTI debt) and the Aa3 unsecured rating assigned to the notes issued under
the General Obligation Indenture (GOI notes) reflect the combination of
the following inputs:
-Baseline credit assessment (BCA) of 3 (on a scale of 1 to 21,
where 1 represents the equivalent risk of a Aaa, 2 a Aa1,
3 a Aa2, and so forth)
-Aaa local currency rating of the Government of Canada
NAV CANADA's BCA is assigned by evaluating factors we believe are relevant
to the credit profile of the issuer, such as i) the business risk
and competitive position of the company versus others within its industry,
ii) the capital structure and financial risk of the company, iii)
the projected performance of the company over the near to intermediate
term, and iv) management's track record and tolerance for risk.
These attributes were compared against other issuers both within and outside
of NAV CANADA's core industry and NAV CANADA's ratings are believed to
be comparable to those of other issuers of similar credit risk.
NAV CANADA is a non-share capital corporation which owns,
operates and maintains Canada's civil air navigation system (ANS).
It acquired the ANS from the Government of Canada in 1996. It operates
the ANS through seven area control centres located at Vancouver,
Edmonton, Winnipeg, Toronto, Montreal, Moncton
and Gander, 41 control towers, 59 flight service stations,
eight flight information centres and various other assets across Canada.
Information sources used to prepare the credit rating are the following:
parties involved in the ratings and public information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
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Investors Service provides a date that it believes is the most reliable
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Please see the ratings disclosure page on our website www.moodys.com
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Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Catherine N. Deluz
VP - Senior Credit Officer
Corporate Finance Group
Moody's Canada Inc.
Chee Mee Hu
MD - Project Finance
Corporate Finance Group
Moody's Investors Service
Moody's Canada Inc.
Moody's affirms NAV CANADA's ratings and outlook and assigns an Aa3 rating to proposed $250 million debt issue
70 York Street
Toronto, ON M5J 1S9
No Related Data.
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