DBRS Morningstar Confirms Ratings on Kiewit Meridiam Partners LLC at A (low) with Stable Trends

DBRS Limited (DBRS Morningstar) confirmed the Issuer Rating of Kiewit Meridiam Partners LLC (ProjectCo) at A (low) with a Stable trend. DBRS Morningstar also confirmed the ratings on the following debt instruments issued by ProjectCo at A (low) with Stable trends:

-- $120.8 million Private Activity Bonds (par and premium);
-- $465.0 million 2021 Transportation Infrastructure Finance and Innovation Act Loan (the 2021 TIFIA Loan);
-- $51.7 million Senior Revenue Bonds Series 2021A; and
-- $465.0 million Senior Project Infrastructure Bonds Series 2021B.

ProjectCo is the special-purpose vehicle responsible for the design, construction, financing, operation, maintenance, and rehabilitation of Kiewit Meridiam Partners’ Central 70 Project (the Project), spanning a 10-mile section of the I-70 East highway in Denver, Colorado, that stretches from I-25 on the west end of the corridor to Tower Road on the east end.

The Project is in its 53rd month of construction, with overall completion at 89.2% based on the progress made to May 28, 2022. The delays have been decreasing over the past year. Along with extensions to certain milestone completion dates, the target substantial completion date has been extended by approximately five months to February 16, 2023. The currently expected substantial completion date is January 31, 2023, which is 16 days ahead of the target substantial completion date. Milestone 5A was achieved on March 25, 2022. DBRS Morningstar notes that there are two open supervening event notices related to discovery of recognized hazardous material. ProjectCo confirmed that no material impact occurred.

During the approximately 29-year service phase, starting on substantial completion, ProjectCo will subcontract its operating and maintenance (O&M) responsibilities to Roy Jorgensen Associates, Inc. (the Maintenance Contractor) for the first 10 years of the service phase (starting with substantial completion) under a fixed-price contract. Thereafter, ProjectCo can choose to either self-perform or renegotiate terms with the Maintenance Contractor for the continued O&M of the Project’s infrastructure. The Project entails typical O&M activities relating to the roadway and covered portions below the top cover, including cleaning, sweeping, landscaping, and snow and ice removal. The minimum debt service coverage ratio during the operation phase remains 1.24 times (x) with a distribution cut-off of 1.20x. The O&M resiliency of 114% and lifecycle resiliency of 36% are supportive of the ratings.

With respect to future rating actions, any material delays may result in a negative rating action. A positive rating action is not expected at this time.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating Public-Private Partnerships (August 19, 2021; https://www.dbrsmorningstar.com/research/383244), which can be found on dbrsmorningstar.com under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (May 17, 2022; https://www.dbrsmorningstar.com/research/396929).

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrsmorningstar.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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