S&P turns Teranet outlook to negative

S&P said it revised the outlook for Teranet Holdings LP to negative from stable and affirmed the BBB issuer and senior secured debt ratings.

“We expect the market conditions will decline more sharply within the next 12 months, which will pressure Teranet's coverage ratios for fiscal 2023. We expect a slowdown in the housing market in Ontario and Manitoba, Teranet's key markets, for the remainder of 2022 and 2023 because we anticipate Bank of Canada could further tighten monetary policy from the current policy rate of 3.75%. As a result, we assume Teranet's Ontario registration volumes for year-end 2022 and 2023 will decline sequentially by about 9% and 16%, respectively,” the agency said in a press release.

S&P said it forecasts Teranet’s 2023 consolidated EBITDA will plunge to about $205 million from about $240 million in 2022.

The weaker outlook reflects the possibility of a downgrade over the next 12-24 months, if the registration volumes fall below S&P’s base case assumption leading to FFO to interest coverage expectations below 1.75x beyond 2023, the agency warned.

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