TEXT-S&P affirms Sanef long and short-term corporate credit ratings

Thu Oct 18, 2012 10:06am EDT

Overview
     -- On Oct. 18, 2012, we affirmed our 'BBB' long-term corporate credit 
rating on Spain-based infrastructure operator Abertis Infraestructuras S.A. 
(Abertis), following our downgrade of Spain to 'BBB-/A-3'.
     -- We equalize our long-term corporate credit rating on France-based toll 
road operator Sanef with that on Abertis to reflect the strategic importance 
of Sanef for Abertis.
     -- We are therefore affirming our 'BBB/A-2' long- and short-term 
corporate credit ratings on Sanef. 
     -- The negative outlook on Sanef reflects that on Abertis. We could lower 
our ratings on Sanef if we downgrade Abertis. 

Rating Action
On Oct. 18, 2012, Standard & Poor's Ratings Services affirmed its 'BBB/A-2' 
long- and short-term corporate credit ratings on French toll road network 
operator Sanef. The outlook is negative.

At the same time, we affirmed our 'BBB' issue rating on Sanef's senior 
unsecured debt. 

Rationale
The affirmation follows a similar action on Sanef's controlling shareholder, 
Spain-based infrastructure operator Abertis Infraestructuras S.A. (Abertis; 
see "Spain-Based Abertis Infraestructuras 'BBB' Rating Affirmed Following 
Sovereign Downgrade; Outlook Negative", published on Oct. 18, 2012, on 
RatingsDirect on the Global Credit Portal). 

We equalize our long-term corporate credit rating on Sanef with that on 
Abertis to reflect our view that Abertis would provide timely and sufficient 
extraordinary support to Sanef in the event of financial distress. This 
support stems from Sanef's strategic importance for Abertis, and Sanef's large 
contribution, through intermediate holding company Holding d'Infrastructures 
de Transport S.A.S. (HIT; not rated), to Abertis' consolidated revenues and 
cash flows. 

In 2011, Sanef's EBITDA represented about 40% of Abertis' EBITDA on a fully 
consolidated basis, and about 25% on a proportionate basis. We anticipate 
that, in 2013, Sanef's contribution to Abertis will decline, but that it will 
still represent about 35% of Abertis' EBITDA on a fully consolidated basis, 
and about 25% on a proportionate basis. The proportionate figures adjust for 
minority shareholdings in HIT and in Brazilian toll-road operator OHL Brasil 
(not rated).

Disregarding our expectation of support from Abertis, we assess Sanef's 
stand-alone credit profile (SACP) at 'bbb-'. The SACP reflects our view of 
Sanef's "excellent" business risk profile, tempered by its "aggressive" 
financial risk profile. Our assessment of Sanef's financial risk profile 
incorporates the leverage of its parent company, HIT. This is because HIT 
relies on Sanef, as its sole asset, to service its debt.

Sanef operates the third-largest interconnected toll-road network in France. 
Although the company is exposed to variations in traffic volumes, it benefits 
from a strong competitive position; favorable concession agreements, including 
yearly inflation-linked tariff increases; high profitability; and positive 
free cash flows. We consider the risk of acquisitions and diversification to 
be low. These strengths are partly offset by Sanef's high indebtedness, and 
its relatively rigid dividend policy.

Liquidity
We assess the liquidity position of Sanef and its parent company HIT as 
"adequate" under our criteria. We estimate that sources of liquidity for the 
12 months to June 30, 2013, will cover uses of liquidity by about 1.3x. 

We estimate liquidity sources in the 12 months to June 30, 2013, to be about 
EUR1 billion. These include:
     -- Funds from operations of about EUR575 million; and
     -- About EUR460 million available under bank lines that expire after June 
30, 2013. In addition, we understand that commitments have been received for 
the renewal of a EUR50 million facility that expired in July, of which EUR10 
million was available on June 30, 2012. 

On June 30, 2012, HIT on-lent about EUR225 million of its cash to Abertis, which
we do not include in our liquidity calculations.

We anticipate that liquidity needs will be about EUR770 million over the same 
period, comprising:
     -- Debt repayments of about EUR330 million; and
     -- Capital spending and dividend payments of about EUR450 million.

Sanef expects to maintain adequate headroom under its financial covenants. 
Following repayment of loans maturing in 2013, HIT's financing arrangements no 
longer include any financial covenants.

Outlook
The negative outlook on Sanef reflects that on Abertis. We could lower our 
rating on Sanef if we take a similar rating action on Abertis. 

In our view, the weak economic environment in Europe could undermine an 
improvement in Abertis' credit metrics and a repayment of its recourse debt, 
both of which support our 'BBB' rating on Abertis and, therefore, our ratings 
on Sanef. 

In addition, under our criteria for rating an entity in the eurozone (European 
Economic and Monetary Union) above the sovereign, we could lower our rating on 
Abertis if we downgrade Spain. 

We anticipate that our ratings on Sanef will evolve in line with the long-term 
rating on Abertis.

Related Criteria And Research
All articles listed below are available on RatingsDirect on the Global Credit 
Portal, unless otherwise stated.
     -- Methodology: Short-Term/Long-Term Ratings Linkage Criteria For 
Corporate And Sovereign Issuers, May 15, 2012
     -- Methodology And Assumptions: Liquidity Descriptors For Global 
Corporate Issuers, Sept. 28, 2011
     -- Nonsovereign Ratings That Exceed EMU Sovereign Ratings: Methodology 
And Assumptions, June 14, 2011
     -- Principles Of Credit Ratings, Feb. 16, 2011
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
     -- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008
     -- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008
     -- Parent/Subsidiary Links; General Principles; Subsidiaries/Joint 
Ventures/Nonrecourse Projects; Finance Subsidiaries; Rating Link to Parent, 
Oct. 28, 2004
     -- Spain Ratings Lowered To 'BBB-/A-3' On Mounting Economic And Political 
Risks; Outlook Negative, Oct. 10, 2012
     -- Toll Facilities' Credit Quality Is Holding Steady Globally Despite 
Bumps In The Road, Oct. 4, 2012
     -- Country Risks, A Weak Economic Climate, And M&A Activity Test 
Resilience Of European Toll Road Network Operators, July 12, 2012

Ratings List
Ratings Affirmed

Sanef
 Corporate Credit Rating                BBB/Negative/A-2   
 Senior Unsecured                       BBB
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