DBRS Limited (DBRS Morningstar) assigned a rating of BBB with a Stable trend to Dollarama Inc.’s (Dollarama or the Company) $250 million 5.084% Senior Unsecured Notes due October 27, 2025, and $450 million 5.165% Senior Unsecured Notes due April 26, 2030 (together, the Notes), which closed on October 26, 2022.
The ratings assigned to these newly issued debt instruments are based on the rating of an already-outstanding debt series of the above-mentioned debt instruments.
Dollarama intends to use the combined net proceeds of the $700 million in Notes to repay the $250 million aggregate principal amount of the outstanding 2.203% Senior Unsecured Notes due November 10, 2022; to repay a portion of outstanding notes from its U.S. commercial paper program; and for general corporate purposes. The Notes will be unsecured and will rank pari passu with all other existing and future unsecured and unsubordinated indebtedness of Dollarama.
The ratings continue to reflect the Company’s strong brand and market position, efficient operations, and national diversification while also considering the competitive retail environment and dependence on supply chain management to maintain low prices.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) 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 (May 17, 2022).
All figures are in Canadian dollars unless otherwise noted.
The principal methodologies are the Global Methodology for Rating Companies in the Merchandising Industry (September 2, 2022; https://www.dbrsmorningstar.com/research/402334/global-methodology-for-rating-companies-in-the-merchandising-industry) and DBRS Morningstar Criteria: Guarantees and Other Forms of Support (August 4, 2022; https://www.dbrsmorningstar.com/research/394683/dbrs-morningstar-criteria-guarantees-and-other-forms-of-support), which can be found on dbrsmorningstar.com under Methodologies & Criteria.
A description of how DBRS Morningstar analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://www.dbrsmorningstar.com/research/397223/interplay-of-global-corporate-finance-rating-methodologies-when-analyzing-corporate-finance-transactions.
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.
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