Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Rating Action:

Moody´s affirms the ratings of LAMSA´s senior secured debentures at Ba2/Aa3.br; changes outlook to stable

 The document has been translated in other languages

Global Credit Research - 05 Feb 2016

Approximately BRL386.70 million of debt securities affected

Sao Paulo, February 05, 2016 -- Moody's América Latina (Moody's) has affirmed the ratings of the BRL386.70 million senior secured debentures issued by Linha Amarela S.A. -- LAMSA at Ba2 on the global scale and Aa3.br on the Brazilian National Scale ("NSR"). At the same time, Moody's changed the outlook to stable from positive.

RATINGS RATIONALE

The affirmation of the ratings reflects primarily: (i) Moody's view that LAMSA, as a mature concession, will continue to present strong and stable operating cash flows, supported by the company's robust asset features and traffic profile; (ii) strong credit metrics for the rating category given the strong economic fundamentals of the concession; (iii) the long remaining concession life; (iv) relatively healthy liquidity profile given the continuing access to funding; and (v) the continuing positive track record of payments by Concessão Metroviária do Rio De Janeiro S.A. -- METRORIO (Ba2/Aa2.br; stable), the concessionaire of the subway system in the city of Rio de Janeiro (Baa3 on review for downgrade), on the intercompany loan provided by LAMSA. The indicated rating provided by Moody´s Privately Managed Toll Roads Methodology maps to an A3 global scale rating, considering historical credit metrics, and Baa1 on a 12-18 month forward looking basis. LAMSA´s Aa3.br national scale rating reflects the standing of the company relative to its domestic peers.

Moody's decision to change the outlook to stable is supported by Brazil's deteriorating macroeconomic environment that could materially affect the positive financial trends registered so far, notwithstanding LAMSA's robust asset features and traffic profile, which have historically resulted in resilient operating cash flows. In such context, the ratings are somewhat constrained by: (i) the potential political interference that could negatively impact tariff adjustments granted by the City of Rio de Janeiro; (ii) the credit risk related to the intercompany loan that has been extended to METRORIO; (iii) the track record of relatively high dividend payments; (iv) the financial covenants embedded in the rated debentures.

LAMSA´s amortizing debentures, which were issued in one single tranche on 31 May 2012, have a 15-year tenor including a 3-year grace period, The debentures were placed with the Carteira Administrada de Transporte Urbano (the Urban Transportation Fund), which is managed by the Caixa Economica Federal, a bank controlled by the Brazilian Federal Government (Baa3 on review for downgrade). The largest portion of the debentures' proceeds (up to BRL 232.6 million) were used to finance LAMSA´s CAPEX program, and the payment, in full, of the outstanding debt of BRL180 million, which was previously raised to finance CAPEX investments. The remaining portion (BRL154.2 million) was used to partially finance the CAPEX program of its sister company, METRORIO, which is also controlled by INVEPAR. METRORIO borrowed this amount from LAMSA by issuing senior unsecured debentures, which were fully underwritten by LAMSA.

LAMSA´s debentures are secured by a pledge of 40% of its present and future toll receivables. In addition, METRORIO provided a corporate guarantee to Caixa Economica Federal (CEF) to back LAMSA's repayment obligation in the amount owed by METRORIO to LAMSA (BRL154.2 million). Also, METRORIO will subrogate to the rights of LAMSA's debenture holders in case METRORIO's guarantee is called by CEF.

LAMSA´s debentures require that it comply with a 1.3x minimum debt service coverage ratio (DSCR) covenant, and maintain an EBITDA / Net Financial Expenses ratio equal to or higher than 1.5x, and Net Debt / EBITDA (Net Debt excludes cash and liquid investments) equal to or lower than 2.0x. Dividend distributions above the minimum threshold required by Brazilian Corporate Law are subject to the compliance by LAMSA with the debentures´ covenants, which include meeting a DSCR equal or higher than 1.3x. As of 30 September 2015, LAMSA was in compliance with the debentures' financial covenants, and we project that the company will continue to comply with the covenants in our five-year projections, adjusting dividend payments accordingly, if needed, to comply with said financial covenants.

INVEPAR has in the past extended intercompany loans to provide liquidity to its subsidiaries with the objective of reducing the average cost of debt on a consolidated basis. Despite LAMSA´s loan to METRORIO, INVEPAR´s risk management policy, which was implemented in 2013, restricts future intercompany loans among its subsidiaries. Therefore, LAMSA cannot provide or receive financing, except when it is the recipient of funds from the parent, INVEPAR. The debentures also restrict LAMSA and METRORIO from providing fiduciary guarantees, individually or in the aggregate, above BRL1 million.

WHAT COULD CHANGE THE RATING UP / DOWN

An upgrade of the ratings will depend mainly on the satisfactory financial and operational performance of METRORIO, including the timely scheduled principal and interest payments of LAMSA's intercompany loan to METRORIO. A sustainable improvement of the macroeconomic environment in Brazil could also justify an upgrade in the outlook.

Conversely, the ratings could be downgraded if: (i) LAMSA's liquidity deteriorates; (ii) METRORIO's credit metrics weaken and/or METRORIO does not make scheduled principal and interest payments; (iii) the ultimate shareholders decide to leverage LAMSA in order to invest in new projects; and (iv) LAMSA's does not comply with the financial covenants of the rated debentures. A rating downgrade could also be triggered if there is a perceived deterioration in the level of supportiveness of the concession and regulatory framework to private concessionaires as well as a weaker perceived level of support from LAMSA's ultimate shareholders. Quantitatively, a downgrade is highly unlikely given the company's strong credit metrics for the rating category. The further deterioration of the domestic macroeconomic environment could also trigger a change in the outlook.

Linha Amarela S.A. -- LAMSA has the concession to operate the toll road services of a 20-km urban route in the city of Rio de Janeiro. The concession was granted by the City Government of Rio de Janeiro in 1998 for a 25-year period. In May 2010, LAMSA committed to additional investments, which resulted in the concession being extended for an additional 15 years, until December 2037. At the end of the concession period, the assets will revert to the City of Rio de Janeiro.

LAMSA is wholly owned by Investimentos e Participações em Infraestrutura S.A. -- INVEPAR (Ba3/A2.br; stable), holding company controlled by the three largest Brazilian pension funds (PREVI, FUNCEF and PETROS) and the engineering and construction group OAS (not rated). INVEPAR was established in March 2000 to invest in companies operating in the transport infrastructure sector.

The principal methodology used in these ratings was Privately Managed Toll Roads published in May 2014. Please see the Ratings Methodologies page on www.moodys.com.br for a copy of this methodology.

Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in June 2014 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".

REGULATORY DISCLOSURES

Information sources used to prepare the rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Please see the ratings disclosure page on www.moodys.com.br for general disclosure on potential conflicts of interests.

Moody's America Latina Ltda. may have provided Other Permissible Service(s) to the rated entity or its related third parties within the 12 months preceding the credit rating action. Please see the special report "Services provided to entities rated by Moody's America Latina Ltda." on our website www.moodys.com.br for further information.

Entities rated by Moody's America Latina Ltda. (and the rated entities' related parties) may also receive products/services provided by parties related to Moody's America Latina Ltda. engaging in credit ratings activities. Please go to www.moodys.com.br for a list of entities receiving products/services from these related entities and the products/services received. This list is updated on a quarterly basis.

The date of the last Credit Rating Action was 01/09/2014.

Moody's ratings are constantly monitored, unless designated as point-in-time ratings in the initial press release. All Moody's ratings are reviewed at least once during every 12-month period.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.br.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Please see ratings tab on the issuer/entity page on www.moodys.com.br for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com.br for further information.

Please see Moody's Rating Symbols and Definitions on the Ratings Definitions page on www.moodys.com.br for further information on the meaning of each rating category and the definition of default and recovery.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com.br for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com.br for additional regulatory disclosures for each credit rating.

Alexandre De Almeida Leite
VP - Senior Credit Officer
Infrastructure Finance Group
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300

William L. Hess
MD - Utilities
Infrastructure Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300

Moody´s affirms the ratings of LAMSA´s senior secured debentures at Ba2/Aa3.br; changes outlook to stable
No Related Data.
© 2017 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.