(The following statement was released by the rating agency)
July 17 - Fitch Ratings has affirmed Italian infrastructure holding group, Atlantia Spa's
(Atlantia), and its fully owned toll road concession subsidiary, Autostrade per
l'Italia Spa's (ASPI) senior unsecured ratings at 'A-'. The agency has also affirmed ASPI's
Long-term Issuer Default Rating (IDR) at 'A-', with a Stable Outlook and the Short-term IDR at
The ratings reflect the strong asset profile, modest refinancing risk in
2012-2013 and stable financial structure, which has virtually no structural
While the Outlook on the Italian sovereign is Negative and the country is facing
recession, Atlantia's Stable Outlook reflects the intrinsic strength and
demonstrated resilience of the business. Fitch's rating case incorporates
traffic decline four times more severe than GDP decline in 2012 and 2013. The
Stable Outlook also reflects Atlantia's rating headroom against the downgrade
trigger, on a backdrop of management's historical prudence and stable financial
However, a marked and durable degradation of the Italian economy, although this
is not Fitch's base case, could derail Atlantia's good record of resilience.
Evidence of recessionary prospects over a prolonged horizon (two years) could
prompt a negative rating action.
Traffic volumes are Atlantia's and ASPI's primary short-term revenue drivers.
Atlantia has a large and diversified network (more than 5,117km in consolidated
perimeter), of which Italy represents 3,095km and 84% of consolidated group
EBITDA in 2011. Italian toll roads traffic has been resilient through the global
financial crisis (maximum 1% decline until 2011), largely because of the lack of
alternatives. Therefore, Fitch has assigned a "stronger" attribute for volume
risk although the severe decline of traffic in H112 (-5.3% adjusted for weather
and strikes), highlights some vulnerability. The effect of the recently
increased exposure to more growth-oriented assets in Latin America is
immaterial, as Fitch only takes into account the dividends received from these
subsidiaries bearing non-recourse debt. The dividends are currently of limited
importance compared to Atlantia's EBITDA.
ASPI's concession framework is similar to a regulated asset base system, where
medium-term growth is generated by the pre-authorised remuneration of capital
improvement plans. It is a business with moderate growth and strong resilience,
where access to cheap funding is a key profitability element. This means
management and shareholders are incentivised to protect the conservative
financial structure. There is price risk, albeit mitigated by the concession
agreement signed in 2007, which is based on a revised formula for annual tariff
adjustment that includes an indexation to 70% of inflation and specific
remuneration factors for the execution of most of the planned capex. Fitch's
assessment of price risk is "mid-range".
The execution of a capex plan of approximately EUR14.7bn between 2012 and 2022
remains ASPI's biggest challenge and driver to increase traffic volume
organically (notably through de-bottlenecking) and to achieve remuneration on
investments that will significantly increase tariffs. Fitch believes Atlantia is
well-equipped to deliver on this challenge. Therefore, Fitch has assigned a
"stronger" attribute for infrastructure/development/renewal risk.
In contrast with project-financed toll roads, as a corporate, Atlantia may make
acquisitions and re-leverage, which would be a credit negative. However,
Atlantia has shown prudence in its acquisitions. In 2011 and 2012, Atlantia has
finalised the sale of Strada dei Parchi in Italy and increased its shareholding
in Latin American assets. The total net consideration was a disposal of
Atlantia's debt is typical of a large corporate. The non-amortising nature of
the debt and lack of material structural protection are weaker features.
However, this is mitigated by the regulated asset base framework, moderate
exposure to refinancing risk thanks to a well diversified range of bullet
maturities and demonstrated good access to bond markets, with proactive and
prudent debt management.
Atlantia's liquidity position at end-June 2012 was strong. According to company
estimates, it benefited from around EUR2,8bn of available credit lines, while
liquid assets and term deposits amounted to EUR130m.The balance makes a
"midrange" attribute for debt structure.
Leverage (net debt to EBITDA) had decreased to 4.4x at FYE11 (pre IFRIC 12),
which was better than Fitch expected. This shows the company's ability to
maintain stable leverage despite the past three years of adverse economic
developments. In Fitch's updated rating case (with slightly more conservative
macroeconomic assumptions than those of management and taking into account the
recessionary environment), leverage is expected to remain around 5.5x for the
next two years. This suggests a "midrange" attribute for debt service.
The equalisation of Atlantia and ASPI's ratings is based on Fitch's Parent and
Subsidiary Linkage methodology and acknowledges the strong legal and operational
ties between the two entities, as evidenced by the cross-guarantees in place and
the tangible financial support provided by Atlantia.
WHAT COULD TRIGGER A RATING ACTION
Positive: A positive rating action could be envisaged if net debt/EBITDA +
dividends (recourse only) was below 4.0x (pre-IFRIC 12; 31 December 2011: 4.4x).
Asset disposals resulting in lowering the recourse debt would support the rating
but are unlikely to trigger an upgrade while economic uncertainty remains.
Negative: A negative rating action could be envisaged if net debt/EBITDA +
dividends (recourse only) rises to 6.0x (pre-IFRIC 12). Adverse government
measures, such as changes in taxation or freeze of tariffs, or a significant
move towards material acquisitions outside of the Italian toll road business,
with impact on the recourse-debt metrics, could also negatively affect the