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TEXT-S&P afrms Aumancha Toll Road 'B+' SPUR,off watch;otlk neg
Mon, 30th Jul 2012 12:49
(The following statement was released by the rating agency)
July 30 -
Overvie
-- We understand that the government of Castile La Mancha has honored outstanding shadow toll payments to Spanish toll road special-purpose company Autovia de la Mancha, S.A. (Aumancha), and that as of July 2012, there are no outstanding arrears.
-- As a result, we are affirming the 'B+' underlying long-term debt rating (SPUR) on the EUR110 million senior secured amortizing loan maturing in July and removing the rating from CreditWatch negative.
-- The insured 'AA-' rating and stable outlook on Aumancha's debt continue to reflect the unconditional and irrevocable guarantee provided by Assured Guaranty (Europe) Ltd.
-- The negative outlook on the SPUR reflects our belief that CLM's ability to maintain regular shadow toll payments in 2012 could be constrained by the increasingly challenging economic and budgetary prospects for the region of CLM and Spain as a whole.
Rating Action
On July 30, 2012, Standard & Poor's Ratings Services affirmed its 'B+' underlying long-term debt rating (SPUR) on Spanish toll road special-purpose company Autovia de la Mancha, S.A.'s (Aumancha) EUR110 million senior secured amortizing loan maturing in July 2031. We also removed the rating from CreditWatch with negative implications, where we had placed it on May 8, 2012. The outlook on the SPUR is negative.
The recovery rating remains unchanged at '3', reflecting our expectation of a meaningful (50%-70%) recovery of principal in the event of a payment default.
The insured 'AA-' rating and stable outlook on Aumancha's debt continue to reflect the unconditional and irrevocable guarantee provided by Assured Guaranty (Europe) Ltd. (AA-/Stable/--). Under our criteria, a rating on monoline-insured debt reflects the higher rating on the monoline insurer, if any, or Standard & Poor's underlying rating (SPUR) on the debt. Therefore, the current rating on the loan reflects that on the monoline insurer.
Rationale
The rating action reflects our understanding that, as of July 24, 2012, the government of Spanish region Castile La Mancha (CLM; not rated) has honored all pending shadow toll payments to Aumancha, in line with its previously expressed committment to restore Aumancha's financial stability.
We understand that Aumancha had recovered all pending July to December 2011 shadow toll payments as of June 28, 2012, via the extraordinary financing mechanism established by the Spanish government to help local and regional governments pay suppliers. Under this scheme, a number of commercial debt holders like Aumancha with unpaid pre-2012 invoices by approved local and regional governments have been able to resort to a new fund established by the Spanish government to discount their outstanding receivables.
Nonetheless, we still believe that increasing budgetary pressures on CLM could limit the new government's ability to maintain regular and timely shadow toll payments in the future.
In addition, in line with our new criteria 'Project Finance Construction And Operations Counterparty Methodology' published on Dec. 20, 2011, on RatingsDirect on the Global Credit Portal, we assign a Counterparty Dependency Assessment (CDA) to counterparties which are material to the transaction and cannot be easily replaced without significant time or cash flow implications. Given the irreplaceable nature of CLM as the source of virtually all Aumancha's operating revenues, we assign an offtake CDA to the transaction that constrains the final rating. Our CDA depends on our view of the credit quality of the regional government of CLM and its history of arrears to commercial debt holders like Aumancha.
Liquidity
We understand that the project met the recent debt service payment on July 15, 2012, without resorting to the still fully funded 12-month Debt Service Reserve Account (DSRA). The next debt service payment of about EUR6.6 million is due on July, 2013 and we believe that, under a regular shadow toll payment regime, Aumancha should not have problems continuing to service its debt just from operating cash flows.
Recovery analysis
Aumancha's senior secured bank loan has a recovery rating of '3', indicating our expectation of meaningful (50%-70%) recovery prospects in the event of a payment default.
Although we calculate a substantial (70%-90%) recovery of outstanding principal on the senior secured loan in the event of a payment default and in the absence of a guarantee from Assured Guaranty (Europe), we cap the recovery rating at '3'. We do this for all projects in Spain that we calculate as having recovery prospects of 70%-90%. The capping reflects our jurisdiction-specific adjustments to recovery ratings in countries where we believe that creditor recoveries will be negatively affected by the particularities of the insolvency regime.
Outlook
The negative outlook on the SPUR reflects our belief that increasing budgetary pressures on CLM could limit the new government's ability to maintain regular and timely shadow toll payments in the future.
We might lower the rating if we did not see regular payment patterns from CLM to Aumancha in the next few months or if our view on CLM's credit quality weakened further. At present, we do not have full visibility on CLM's ability to continue to honor timely shadow toll payments, particularly in the context of a rapidly evolving economic and budgetary environment in both CLM and Spain as a whole.
We would only take a positive rating action if we observed evidence of sustained timely shadow toll payments from CLM to Aumancha and if our perception on CLM's creditworthiness stabilized at levels above Aumancha's current rating.
The stable outlook on the secured debt issue reflects that on Assured Guaranty. (For more information, see 'Assured Guaranty Ltd. And Operating Companies Downgraded; Outlook Stable,' Nov. 30, 2011.)
Related Criteria And Research
-- Transaction Update: Autovia de la Mancha S.A., May 23, 2012
-- Research Update: Spanish Autovia de La Mancha Underlying Debt Rating Lowered To 'B+' On Continuing Arrears; On Watch Negative, May 8, 2012
-- Project Finance Construction And Operations Counterparty Methodology, Dec. 20, 2011,
-- Research Update: Spanish Autovia de la Mancha Underlying Debt Rating Lowered To 'BB+' Due To Continuing Toll Arrears; Outlook Negative, July 8, 2010
-- Transaction Update: Autovia de la Mancha, S.A., May 18, 2011
-- Updated Project Finance Summary Debt Rating Criteria, Sept. 18, 2007
-- Use Of CreditWatch And Outlooks, Sept. 14, 2009
-- Recovery Ratings For Project Finance Transactions, April 8, 2005
-- Postsale: Autovia de la Mancha, S.A. (Aumancha), Nov. 18, 2008
Ratings List
Ratings Affirmed; CreditWatch/Outlook Action
To From
Autovia de la Mancha, S.A.
Senior Secured B+ B+/Watch Neg
Recovery Rating 3 3
(Bangalore Ratings Team, Hotline: +91 80 4135 5898 satish.kb@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: satish.kb.thomsonreuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
July 30 -
Overvie
w
-- We understand that the government of Castile La Mancha has honored outstanding shadow toll payments to Spanish toll road special-purpose company Autovia de la Mancha, S.A. (Aumancha), and that as of July 2012, there are no outstanding arrears.
-- As a result, we are affirming the 'B+' underlying long-term debt rating (SPUR) on the EUR110 million senior secured amortizing loan maturing in July and removing the rating from CreditWatch negative.
-- The insured 'AA-' rating and stable outlook on Aumancha's debt continue to reflect the unconditional and irrevocable guarantee provided by Assured Guaranty (Europe) Ltd.
-- The negative outlook on the SPUR reflects our belief that CLM's ability to maintain regular shadow toll payments in 2012 could be constrained by the increasingly challenging economic and budgetary prospects for the region of CLM and Spain as a whole.
Rating Action
On July 30, 2012, Standard & Poor's Ratings Services affirmed its 'B+' underlying long-term debt rating (SPUR) on Spanish toll road special-purpose company Autovia de la Mancha, S.A.'s (Aumancha) EUR110 million senior secured amortizing loan maturing in July 2031. We also removed the rating from CreditWatch with negative implications, where we had placed it on May 8, 2012. The outlook on the SPUR is negative.
The recovery rating remains unchanged at '3', reflecting our expectation of a meaningful (50%-70%) recovery of principal in the event of a payment default.
The insured 'AA-' rating and stable outlook on Aumancha's debt continue to reflect the unconditional and irrevocable guarantee provided by Assured Guaranty (Europe) Ltd. (AA-/Stable/--). Under our criteria, a rating on monoline-insured debt reflects the higher rating on the monoline insurer, if any, or Standard & Poor's underlying rating (SPUR) on the debt. Therefore, the current rating on the loan reflects that on the monoline insurer.
Rationale
The rating action reflects our understanding that, as of July 24, 2012, the government of Spanish region Castile La Mancha (CLM; not rated) has honored all pending shadow toll payments to Aumancha, in line with its previously expressed committment to restore Aumancha's financial stability.
We understand that Aumancha had recovered all pending July to December 2011 shadow toll payments as of June 28, 2012, via the extraordinary financing mechanism established by the Spanish government to help local and regional governments pay suppliers. Under this scheme, a number of commercial debt holders like Aumancha with unpaid pre-2012 invoices by approved local and regional governments have been able to resort to a new fund established by the Spanish government to discount their outstanding receivables.
Nonetheless, we still believe that increasing budgetary pressures on CLM could limit the new government's ability to maintain regular and timely shadow toll payments in the future.
In addition, in line with our new criteria 'Project Finance Construction And Operations Counterparty Methodology' published on Dec. 20, 2011, on RatingsDirect on the Global Credit Portal, we assign a Counterparty Dependency Assessment (CDA) to counterparties which are material to the transaction and cannot be easily replaced without significant time or cash flow implications. Given the irreplaceable nature of CLM as the source of virtually all Aumancha's operating revenues, we assign an offtake CDA to the transaction that constrains the final rating. Our CDA depends on our view of the credit quality of the regional government of CLM and its history of arrears to commercial debt holders like Aumancha.
Liquidity
We understand that the project met the recent debt service payment on July 15, 2012, without resorting to the still fully funded 12-month Debt Service Reserve Account (DSRA). The next debt service payment of about EUR6.6 million is due on July, 2013 and we believe that, under a regular shadow toll payment regime, Aumancha should not have problems continuing to service its debt just from operating cash flows.
Recovery analysis
Aumancha's senior secured bank loan has a recovery rating of '3', indicating our expectation of meaningful (50%-70%) recovery prospects in the event of a payment default.
Although we calculate a substantial (70%-90%) recovery of outstanding principal on the senior secured loan in the event of a payment default and in the absence of a guarantee from Assured Guaranty (Europe), we cap the recovery rating at '3'. We do this for all projects in Spain that we calculate as having recovery prospects of 70%-90%. The capping reflects our jurisdiction-specific adjustments to recovery ratings in countries where we believe that creditor recoveries will be negatively affected by the particularities of the insolvency regime.
Outlook
The negative outlook on the SPUR reflects our belief that increasing budgetary pressures on CLM could limit the new government's ability to maintain regular and timely shadow toll payments in the future.
We might lower the rating if we did not see regular payment patterns from CLM to Aumancha in the next few months or if our view on CLM's credit quality weakened further. At present, we do not have full visibility on CLM's ability to continue to honor timely shadow toll payments, particularly in the context of a rapidly evolving economic and budgetary environment in both CLM and Spain as a whole.
We would only take a positive rating action if we observed evidence of sustained timely shadow toll payments from CLM to Aumancha and if our perception on CLM's creditworthiness stabilized at levels above Aumancha's current rating.
The stable outlook on the secured debt issue reflects that on Assured Guaranty. (For more information, see 'Assured Guaranty Ltd. And Operating Companies Downgraded; Outlook Stable,' Nov. 30, 2011.)
Related Criteria And Research
-- Transaction Update: Autovia de la Mancha S.A., May 23, 2012
-- Research Update: Spanish Autovia de La Mancha Underlying Debt Rating Lowered To 'B+' On Continuing Arrears; On Watch Negative, May 8, 2012
-- Project Finance Construction And Operations Counterparty Methodology, Dec. 20, 2011,
-- Research Update: Spanish Autovia de la Mancha Underlying Debt Rating Lowered To 'BB+' Due To Continuing Toll Arrears; Outlook Negative, July 8, 2010
-- Transaction Update: Autovia de la Mancha, S.A., May 18, 2011
-- Updated Project Finance Summary Debt Rating Criteria, Sept. 18, 2007
-- Use Of CreditWatch And Outlooks, Sept. 14, 2009
-- Recovery Ratings For Project Finance Transactions, April 8, 2005
-- Postsale: Autovia de la Mancha, S.A. (Aumancha), Nov. 18, 2008
Ratings List
Ratings Affirmed; CreditWatch/Outlook Action
To From
Autovia de la Mancha, S.A.
Senior Secured B+ B+/Watch Neg
Recovery Rating 3 3
(Bangalore Ratings Team, Hotline: +91 80 4135 5898 satish.kb@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: satish.kb.thomsonreuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
