NEW YORK--(BUSINESS WIRE)-- Fitch Ratings rates ENA Norte Trust's USD600 million senior secured notes 'BBB' (International scale) and 'AAA(pan)'(National scale). The Outlook is Stable.
Key Rating Drivers
Essential Transportation Project: Corredor Norte is an instrumental road for commuters and commercial traffic. The road connects Albrook airport in the west, to Brisas del Golf, in the east of Panama City, and serves a large commuter base with growing economic and commercial activities.
Limited Competition: Corredor Norte represents a viable alternative for commuting purposes, as the city frequently presents severe traffic congestions and delays. The city's road network is limited, while commuter and motorization levels continue to rise.
High Motorization Rates: Panama City's per capita vehicle ownership is considered high for a developing country. Motorization levels are mainly sustained by favorable tax rates imposed on car sales, and sufficient consumer-credit availability. Car ownership is expected to increase further as the economy expands.
Stable and Growing Economy: The project is located in one of the fastest growing economies in Latin America, with a dollarized, open regime and significant levels of foreign direct investment. Economic growth in Panama is expected to continue in the short and intermediate term as ongoing infrastructure projects are completed.
Adequate Structural Features: The issuance is structured with a pass-through amortization mechanism which prohibits dividend distributions while the notes are outstanding, and employs all excess cash for the repayment of principal. Liquidity reserves, for debt service and major maintenance included in the structure, are deemed sufficient to maintain financial stability during stressed periods.
Significant Leverage: ENA Norte Trust's level of indebtedness is significant and requires certain level of traffic growth and stability in toll rates to preserve sound financial performance.
What Could Trigger a Rating Action
--Lower revenue profile resulting from insufficient toll adjustments could further pressure financial ratios;
--Significant and sustained traffic contraction derived from an adverse economic environment and/or increased modes of transport competition.
The notes are secured by the project's toll revenues; all rights, titles, and interests of the ENA Norte Trust; and the assigned rights, the transaction accounts, and all of the issued and outstanding shares of ENA Norte.
The acquisition of Corredor Norte by the government is a continuation of the Infrastructure Improvement Plan developed by the current presidential administration. The acquisition is expected to be executed through Empresa Nacional de Autopista (ENA) which is structured as a Sociedad Anonima (limited liability) entity. ENA created the Share Trust, as a special purpose vehicle (SPV) which will hold a newly created company, Autopista Norte N.A. (Autopista Norte), to which all rights of the concession will be transferred from PYCSA Panama.
The Share Trust, once holding all the concession's rights of Corredor Norte as well as the collateral through Autopista Norte, and after paying the market price to PYCSA, will dissolve Autopista Norte, distributing all the 'Assigned Rights' and assets to ENA Norte S.A. which will subsequently assign them to ENA Norte Trust. ENA Norte Trust is expected to be a bankruptcy-remote, single-purpose entity, regulated under the Trust Law of Panama with no recourse to the government.
Toll-collection rights from Corredor Norte's Phase I, Phase IIA, and Panama-Madden Segment, comprising 33 kilometers (nearly 20.5 miles) along the northern region of Panama City, are assigned to ENA Norte Trust.
Additional information is available at 'www.fitchratings.com' . 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 and Related Research:
--'Rating Criteria for Infrastructure and Project Finance'; Jul. 12, 2012;
--'Rating Criteria for Toll Roads, Bridges, and Tunnels; Aug. 2, 2012.
Applicable Criteria and Related Research:
Rating Criteria for Toll Roads, Bridges, and Tunnels
Rating Criteria for Infrastructure and Project Finance
Omar Valdez, +1 212-908-0713
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Rodrigo Contreras, +506-2-296-9182
Alberto Santos, +1 212-908-0714
Elizabeth Fogerty, +1 212-908-0526
Source: Fitch Ratings