DBRS rates Teranet bonds BBB (high)

DBRS said it finalized the provisional rating of BBB (high) with a stable trend on the $1.58 billion of senior secured debt issued by Teranet Holdings LP, the financing vehicle unconditionally guaranteed by Teranet Inc.

The issued debt included $475 million of five-year bonds, $450 million of 10-year bonds, $450 million of 30-year bonds and $200 million of 20-year real return bonds.

The rating reflects the fact that Teranet owns the Province of Ontario's electronic land registry system and has the exclusive right to access the data and operate the system, DBRS said.

The business generates strong and resilient cash flow based on long-term growth in volume, stable fees and high margins, the agency said.

But, the registration activity rate, which is highly correlated with the economy, influences revenue and contributes some cyclicality to overall results, DBRS said.

Teranet is inherently a strong free cash flow generating business, with high levels of EBITDA and low capital expenditure requirements, the agency said.

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