Jan 18 - Fitch Ratings has assigned the prospective EUR400m bond to be
issued by Ferrovial Emisiones S.A. and guaranteed by the parent
Ferrovial S.A. (Ferrovial) and a number of operating subsidiaries a 'BBB-(EXP)'
expected rating. The final rating is contingent on the receipt of final
documents conforming to information already received.
The rating reflects Ferrovial S.A.'s solid financial profile and the ample
headroom of its credit metrics for the current rating level. The equalisation of
the bond's expected rating and Ferrovial S.A.'s Issuer Default Rating (IDR)
reflects its limited structural subordination.
Divestments and dividends
Ferrovial continued its asset rotation policy. In 2H12, Ferrovial sold a 16.3%
stake in Heathrow Holdings in two different transactions, diluting its stake to
33.6% from 49.9%.Total proceeds from the sales amount to more than EUR920m. In
December 2012 Ferrovial paid an interim dividend of EUR1.0 per share and will
propose an additional EUR0.25 per share to be paid in 2013, for a total payout
of almost EUR920m. Although this represents a major increase from the EUR330m
2011 dividend, Fitch deems this increased cash dividend to be credit neutral
given the recent disposal and estimates Ferrovial will remain in a net cash
Ferrovial plans to issue a five-year EUR500m bond. The bond issuance would be a
mild positive credit factor, allowing the extension of debt maturities and
disintermediation from bank debt. Out of the total proceeds, EUR500m will be
used to pre-pay the corporate bank debt maturing in 2015, while EUR100m will be
used for general corporate purposes. The bond will smooth the debt maturity
profile that currently has a peak in 2015 and will increase the already solid
Limited Structural Subordination
The bond will be unsecured ranking pari passu with the syndicated revolving
credit facility (RCF) and will be guaranteed by the same subsidiaries. These do
not include some operating subsidiaries, such as, among others, Budimex in the
construction sector and Amey in the services sector. The bond will be therefore
structurally subordinated to the debt of these subsidiaries, which however
represent a limited portion (less than 20%) of total recourse gross debt.
Rating continues to show headroom, taking into account recent operating
performance. The operating performance of the recourse businesses (construction
and services) in 9M12 was better than Fitch' expectations, although it was
impacted by some positive factors, such as the release of unused provisions,
that Fitch deems not repeatable. The proceeds from the Spanish government
initiative to support regional governments to pay delayed receivables were also
higher than Fitch's assumption, with a positive impact on working capital.
The group's financial profile remains commensurate with the ratings. Fitch
adjusts leverage calculations for Ferrovial to reflect the non-recourse nature
of the toll-roads and airports businesses by excluding related EBITDA and debt
but including sustainable dividends. On this adjusted basis, Fitch forecasts
Ferrovial's net leverage (net debt to EBITDAR, with R defined as rents) will
remain below 1x on a sustained basis.
RATING SENSITIVITY GUIDANCE:
Positive: Future developments that could lead to positive rating actions
- Further visibility and confirmation in next year of dividends from
non-recourse businesses, provided that leverage remains at current levels.
Negative: Future developments that could lead to negative rating action include:
- A sustained increase in the company's leverage on a recourse basis, with net
debt to EBITDAR plus dividends rising above 1.0x), due to either debt-funded
acquisitions, large equity contributions to non-recourse funded businesses, or
higher than expected capex.
- A sharp decrease in orders.
- Deterioration of working capital dynamics, caused by severe payment delays
from its public sector customers.
Additional information is available on www.fitchratings.com. For regulatory
purposes in various jurisdictions, the supervisory analyst named above is deemed
to be the primary analyst for this issuer; the principal analyst is deemed to be
The ratings above were solicited by, or on behalf of, the issuer, and therefore,
Fitch has been compensated for the provision of the ratings.
Applicable criteria, "Corporate Rating Methodology", dated 8 August 2012, are
available at www.fitchratings.com.
Applicable Criteria and Related Research:
Corporate Rating Methodology