European Infrastructure Finance Yearbook - Investing In Bonds ...

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TRANSPORTATION INFRASTRUCTURE 88 ■ NOVEMBER 2007 addition, DP World will likely be able to call on Dubai World to provide liquidity, as has occurred previously to fund acquisitions. Outlook The stable outlook assumes that DP World will continue to benefit from its close strategic relationship with, and ownership by, the government of Dubai. Any indication that the government’s support for the company has weakened would result in a change in the rating although, of itself, the sale of a minority stake in the company would be unlikely to affect the ratings. The outlook also assumes that the company will successfully execute its business plan and fulfill its financial forecasts, in the light of any global economic downturn, increased competition, and successful execution of the capital expenditure program, including acquisitions. ■ STANDARD & POOR’S EUROPEAN INFRASTRUCTURE FINANCE YEARBOOK
Publication Date: June 7, 2007 Issuer Credit Rating: A/Negative/A-1 Primary Credit Analyst: Alexandre de Lestrange, Paris, (33) 1-4420-7316 Secondary Credit Analyst: Lidia Polakovic, London, (44) 20-7176-3985 SANEF Rationale The ratings on Sanef are equalized with those on Abertis Infraestructuras S.A. (A/Negative/--). Following its privatization, Sanef is controlled by Abertis through 52.6%-owned Holding d’Infrastructures de Transport S.A.S. (HIT; A/Negative/--), the intermediary vehicle that acquired Sanef. The rating on Abertis reflects the company’s excellent business profile, with strong and stable cash flow generation derived largely from its tollroad concession business, a supportive regulatory framework both in Spain and France, and fairly manageable future capital-expenditure needs. These strengths are offset by Abertis’ weakened financial profile and lack of dividend flexibility, as well as its appetite for additional acquisitions, which could further impair its business and financial profile. It is important to note that without this support, HIT and Sanef’s underlying credit quality would be significantly weaker. On a combined, stand-alone basis, HIT and Sanef would have very low investment-grade ratings. If Abertis’ continued acquisitive strategy significantly reduces Sanef’s contribution to Abertis’ consolidated financial profile, HIT and Sanef could be rated one notch below Abertis. The ratings on Sanef reflect its strong market position as the third-largest interconnected tollroad network across key economic and tourist corridors in France, supportive concession agreements, high profitability, and increasing positive free cash flow generation. These strengths are offset by Sanef’s exposure to traffic risk, a weakened financial profile following its acquisition by HIT--particularly when HIT’s debt is factored in--and aggressive dividend payout to HIT limiting debt burden curtailment and exposing lenders to substantial refinancing risk. In the financial year ended Dec. 31, 2006, Sanef’s consolidated EBITDA amounted to €809 million, up 8.6% on 2005. EBITDA essentially derived from toll revenues, which grew 6% in 2006, and should continue to represent 90% or more of revenues over the medium term. The unadjusted EBITDA margin increased to 66%. Consolidated HIT and Sanef net debt peaked at about €6.8 billion (excluding Sanef’s debt revaluation following acquisition), in line with expectations, at year-end 2006. With a STANDARD & POOR’S EUROPEAN INFRASTRUCTURE FINANCE YEARBOOK TRANSPORTATION INFRASTRUCTURE consolidated net-debt-to-EBITDA ratio of 8.7x, the companies were still comfortably complying with the consolidated covenants at HIT’s level (maximum ratio of 10.5x) at year-end 2006. Based on the consolidated covenants at the HIT level, leverage is expected to decrease to 6.5x at year-end 2012. Sanef’s group net debt at 5.2x EBITDA at year-end 2006 is still well below the threshold of 7.0x set by Caisse Nationale des Autoroutes (AAA/Stable/--). Liquidity Sanef’s liquidity is satisfactory, owing to steady cash flow generation stemming from the tollroad business. Financing needs for 2007 include some €469 million of debt maturing until Dec. 31, 2007, and a forecast €176 million dividend payment to HIT based on 100% payout of 2006 net income. These were partially covered by available cash and marketable securities of €223 million at yearend 2006 and expected positive free operating cash flow (defined as funds from operations {FFO} plus working capital change, minus capital expenditures) of about €280 million in 2007, making debt refinancing necessary. Outlook The negative outlook mirrors that on Abertis and reflects mainly our concern that Abertis is now pursuing a more aggressive acquisition strategy following the purchase of a 32% stake in Eutelsat Communication S.A. (BB+/Stable/B), the holding company of Eutelsat S.A. We expect Abertis to be able to meet the target ratios we indicated on June 1, 2006: FFO to gross debt of about 13%-15% and FFO interest coverage of about 3.5x-4x. We expect Abertis to approach the lower end of these ranges over the next two years, and to make continued improvements toward the higher end of the ranges thereafter. Abertis does not have headroom for further debt-financed acquisitions at the current rating level. A stronger-than-originally-expected financial performance could lead to a revision of the outlook to stable on Abertis, and therefore on Sanef and HIT. ■ NOVEMBER 2007 ■ 89
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November 2007 Infrastructure Financ
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CONTENTS Introduction STANDARD & PO
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INTRODUCTION 2007: New Challenges A
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ject Finance Rating Distribution: I
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COMMENTARY Publication Date: Sept.
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(Bil. ) 140 120 100 80 60 40 20 0 F
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UTILITIES EUROPEAN UTILITIES Once a
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UTILITIES approach to ownership unb
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UTILITIES 16 ■ NOVEMBER 2007 tran
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UTILITIES 18 ■ NOVEMBER 2007 Limi
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UTILITIES 20 ■ NOVEMBER 2007 •
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Publication Date: osenergoatom (sta
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UTILITIES 24 ■ NOVEMBER 2007 Tabl
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UTILITIES 26 ■ NOVEMBER 2007 supp
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UTILITIES 28 ■ NOVEMBER 2007 pres
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UTILITIES 30 ■ NOVEMBER 2007 Tabl
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UTILITIES 32 ■ NOVEMBER 2007 The
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UTILITIES 34 ■ NOVEMBER 2007 thei
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Page 56 and 57: TRANSPORTATION INFRASTRUCTURE 54
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PROJECT FINANCE/PUBLIC-PRIVATE PART
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RATINGS LIST RATINGS LIST Utilities
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RATINGS LIST Transportation Infrast
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RATINGS LIST Project Finance Name I
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CONTACTS KEY ANALYTICAL CONTACTS Fr
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ARGENTINA AUSTRALIA BRAZIL CANADA C
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