TransLink gets stable, unchanged global credit rating from Moody's
Three levels of government plus representatives from Translink, transit unions and stake holders took part in a press conference to announce further transit expansion and service improvements for the Lower Mainland, in Vancouver, BC Tuesday, January 17, 2017. Pictured is Kevin Desmond, CEO Translink. (Jason Payne/ PNG)
A number of major developments in recent months have helped TransLink maintain a stable rating and earn a positive outlook from Moody’s Investors Service.
This week, the global credit rating company released a report updating its credit opinion from October. In that opinion, Moody’s gave the regional transit authority an Aa2 stable rating. The update gave TransLink the same rating, which is the third highest available, behind Aaa and Aa1.
“We think this is an excellent, positive report, and it’s an affirmation of strength of the organization from a financial standpoint and programmatic standpoint,” said TransLink CEO Kevin Desmond.
“It’s a reaffirmation more generally that we’re moving in the right direction. We’re making things happen, we’ve righted the ship over the last couple of years.”
Adam Hardi, an assistant vice-president and analyst at Moody’s, said the company decided to do an update because muchhappened during the last four months: The first phase of the 10-year Vision for Metro Vancouver Transportation was approved and planning for the second phase is underway, the Evergreen Line SkyTrain extension opened and service improvements have been implemented. Final ridership figures for 2016 were also released in January, showing a 4.5-per-cent increase over 2015.
“I think it’s fair to say it’s overall positive developments,” said Hardi.
The Moody’s report notes that TransLink suffered a series of setbacks in 2015, from a failed referendum on a new sales tax to support transit improvements, to a tarnished image amid criticisms of executive pay levels, service issues and delays with the introduction of the Compass card.
However, Moody’s said TransLink has made strides to address its challenges. This includes hiring Desmond, finishing the rollout of the Compass card and closing fare gates, coming up with 10-year investment plan and improving public engagement.
When asked why TransLink’s rating hasn’t changed in spite of its overall improvement, Hardi said it’s in large part because of its debt burden, which is close to 260 per cent and the highest of the transit authorities Moody’s rates.
Moody’s is projecting that TransLink’s debt will increase slightly over the next two years because of ongoing capital projects, but will begin to gradually decrease in 2018.
“That remains a significant pressure point on the rating itself,” said Hardi. “Overall, we’ve seen some improvement, but not sufficient for us change the rating on TransLink.”
Desmond said TransLink is comfortable with its debt burden and happy with its rating.
“The better the rating you have from rating agencies, the more competitive you can be in the lending market and that’s really, really important to keep the long-term costs of our capital projects as low as we can.”