Fitch Ratings has affirmed
Fitch has also affirmed
A full list of rating actions is at the end of this commentary.
RATING RATIONALE
The rating action follows the recently-announced intention of
The rating is affirmed at 'BB' as, under a scenario of full acceptance of the VTO, Fitch sees the group's metrics as consistent with a 'BB+' conso/'BB' Holding company ratings.
The Negative Outlook considers the lack of visibility on how the group will fund the planned growth once the cash from the
The Negative Outlook also considers the uncertainties about Abertis's governance given the evolution of the relationship between
Abertis
Abertis's 'BBB' rating reflects the geographically diversified portfolio of core and mature assets and the relatively high leverage profile in the context of a weighted average life of its portfolio of around 12 years.
The rating - which reflects the standalone credit profile of the Spanish-based toll road group - remains commensurate with the maximum two-notch distance from the
The Outlook on Abertis is Negative as current and expected group leverage is high and above 6x until 2023 in the Fitch Rating Case (FRC). Traffic is recovering (the 2021 actual level was 5% below the 2019 level, the 1Q22 level was 2% above 1Q19), but the slowdown in GDP growth compared to last year's expectations is creating uncertainties about medium-term traffic evolution. There is also low visibility on the dividend policy from 2023. As discussed above on
AdR
The 'BBB-' rating on AdR considers its strong linkages with
AdR's debt has no material ring-fencing features although the airport concession agreement provides some moderate protection against material re-leveraging of the asset. The Negative Outlook on the entity reflects the corresponding outlook on
ASPI
We have not taken action on ASPI's 'BB+'/RWP IDR. ASPI still remains part of
KEY RATING DRIVERS
VTO on Atlantia Shares
On 14 April a newly created SPV (BidCo) launched a
The offer aims to delist
The success of BidCo's VTO is conditional on certain conditions including achieving a number of shares tendered to the offer exceeding 90% of
The VTO is the latest development over the ownership of
VTO Funding and Implications for Atlantia Creditors
BidCo will meet the financial commitment to honour the VTO by a mix of equity/shareholder loans by BIP and debt injected at
According to our preliminary calculations, and assuming 100% acceptance, group leverage post- transaction will peak in 2022 above 8x under the FRC. Organic growth will sustain a progressive deleverage in 2023-2024, but net debt/EBITDA will remain sustainably above 7x under the FRC.
We view the transaction as being credit negative as it ultimately results in a swap of ASPI's resilient and sizeable cash flow generation with a return of capital to shareholders only. That leaves
Shareholder Agreement
BidCo is ultimately owned by Sintonia/BIP which entered into a shareholder agreement to govern
Sintonia will appoint
Sintonia and BIP have agreed an investment policy to guide
The parties have also defined a financial policy for
Rating Approach
We assess
While we analyse the consolidated credit profile, we also maintain a focus on
For an overview of
For an overview of Abertis's credit profile, including key rating drivers, see the rating action commentary 'Fitch Affirms Abertis at 'BBB'; Hybrid Bonds at 'BB+'; Outlooks Negative' published on
For an overview of AdR's credit profile, including key rating drivers, see the rating action commentary 'Fitch Revises Aeroporti di
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A failure to deleverage to below 7x by 2024 under the FRC. Fitch may re-assess this ratio trigger and associated debt capacity if the businesses risk profile or average concession tenor adversely change.
A sustained move towards large-scale, debt-funded acquisitions.
A material increase in
Abertis
A failure to improve Fitch-adjusted leverage to below 6.0x by 2024 under the FRC.
AdR
A negative rating action on
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Greater visibility on the group's future growth plans, capital structure, financial policy as well as governance at Abertis, coupled with a clearer path to traffic recovery could lead to a revision of the Outlook to Stable.
Abertis
A clearer view on medium-term traffic evolution, governance and dividend policy, combined with an evolution of consolidated net debt-to-EBITDA at least in line with the FRC and consistently below 6.0x by 2024, could lead to the Outlook being revised to Stable.
AdR
Positive rating action on
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 '
Criteria Variation
The analysis includes a variation from the 'Rating Criteria for Infrastructure and Project Finance' to determine the notching of Abertis's hybrid instruments relative to Abertis's IDR, and the application of Equity Credit (EC).
Fitch allocates hybrids to the following categories: 100% equity, 50% equity and 50% debt, or 100% debt. The decision to use only three categories reflects Fitch's view that the allocation of hybrids into debt and equity components is a rough and qualitative approximation, and is not intended to give the impression of precision.
The focus on viability means Fitch will typically allocate EC to instruments that are subordinated to senior debt and have an unconstrained ability for at least five years of consecutive coupon deferral. To benefit from EC, the terms of the instrument should not include mandatory payments, covenant defaults, or events of default that could trigger a general corporate default or liquidity need. Structural features that constrain a company's ability to activate equity-like features of a hybrid make an instrument more debt-like.
Hybrid ratings are notched down from the IDR. The notches represent incremental risk relative to the IDR, these notches are a function heightened risk of non-performance relative to other (eg. senior) obligations. Hybrids that qualify for equity credit are (deeply) subordinated and typically rated at least two notches below the IDR.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
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.
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