Fitch gives Ventas Canada notes BBB+

Fitch Ratings said it assigned a BBB+ rating to the C$275 million senior unsecured notes due 2023 issued by Ventas Canada Finance Ltd.

The notes are guaranteed by Ventas, Inc. (VTR; long-term issuer default rating BBB+, stable) and pari passu with all debt issued by the company.

“Fitch projects that leverage will continue to sustain between 5.5x and 6x; and whether it migrates meaningfully lower will depend on the extent to which VTR prioritizes rating aspirations and credit metrics over other goals,” the agency said in a news release.

“The company has a thinner cushion against events such as deterioration in recurring operating EBITDA, from a decline in the RIDEA portfolio or tenant credit issues in the net lease portfolio, than in prior years with leverage near Fitch's rating sensitivity for negative momentum.

“The ratings have limited tolerance for leveraging transactions or leverage-neutral transactions that rely on future dispositions or equity issuances,” the agency explained.

Fitch calculates that Ventas had leverage of 5.7 times and 5.8 times for the years ended Dec. 31, 2015 and Dec. 31, 2016, respectively, and 6.1 times for the quarter ended March 31, 2017.

Ventas expects leverage will be in line with where it was at the end of 2016.

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