Fitch Ratings has affirmed
The Outlook is Stable.
Fitch has also affirmed MTRC's Short-Term Foreign-Currency IDR at 'F1+' and senior unsecured rating at 'AA-'.
MTRC's ratings are equalised with those of
KEY RATING DRIVERS
Status, Ownership and Control: 'Very Strong'
The government is MTRC's largest and controlling shareholder, with a 74.82% stake at
Support
We expect the government to maintain a robust willingness to support MTRC in the medium term, in light of its significant strategic importance. MTRC operates under a supportive framework, including profit sharing from property development rights and fare setting rights, which are based on a fare-adjustment mechanism agreed with government to ensure reliable railway services, while maintaining MTRC's profitability. EBITDA generated from the
Socio-Political Implications of Default: 'Strong'
We believe a default by MTRC would disrupt
Financial Implications of Default: 'Very Strong'
MTRC's monopoly status results in the company being a primary investor and financing vehicle for the needs of the railway network, including maintenance, upgrades and expansion. We expect the company to invest in metro development according to government plans. We also believe that the government has high incentives to avoid MTRC's default, as this would weaken the city's reputation and impair the availability and cost of financing options.
Standalone Credit Profile
The revenue defensibility and operating risk assessment, together with MTRC's strong financial profile, leads to a Standalone Credit Profile of 'a'.
Revenue Defensibility 'Midrange'
MTRC operates
Operating Risk 'Midrange'
MTRC has well identified cost drivers with moderate volatility. We expect the necessary resources and labour for its operation and expansion to be in adequate supply. MTRC has large capital expenditure plans, mostly less-adjustable maintenance expenditure. MTRC's total capex is also exposed to the uncertainty of investment expenditures for the
Financial Profile 'Stronger'
We expect MTRC's monopoly status, along with its expanding system network and resilient property business, to keep its leverage profile reasonable, despite large capex needs. MTRC's net debt/Fitch-calculated EBITDA, excluding restricted cash, remained favorable, at 1.7x at end-2021. We expect leverage to remain below 4.0x through to 2026, even under a stressed rating case forecast.
Derivation Summary
MTRC's IDR was derived from the four factors under our Government-Related Entities Rating Criteria. We believe the
The Standalone Credit Profile is derived from our assessment of the company's revenue defensibility, operating risk and financial profile under the Public Sector, Revenue-Supported Entities Rating Criteria.
Issuer Profile
The MTRC is a public listed company on the
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Negative rating action on the
Significant changes that lead to a dilution of government links or control, a weaker government support record and expectations, or weaker socio-political and financial implications of a default
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Positive rating action on the
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
Best/Worst Case Rating Scenario
International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
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