EUR750 million of debt securities affected
London, 08 March 2011 -- Moody's Investors Service has today assigned a Baa2 rating to the EUR750
million, 5.75% Guaranteed Notes due in 2018 (the "Notes")
to be issued by HIT Finance B.V. (the "Issuer"),
a financing subsidiary of Holding d'Infrastructures de Transport
("HIT", the "Guarantor"). The outlook
assigned to the rating is stable.
RATINGS RATIONALE
Moody's assignment of a Baa2 rating to the Notes is a result of the unconditional
and irrevocable guarantee provided by HIT (Baa2 issuer rating, stable
outlook). Therefore, the rating of the Notes reflects solely
the credit quality of the Guarantor.
The proceeds of the Notes are expected to be used to re-finance
a portion of the existing EUR1.3 billion bank facility at HIT and
with a final maturity in October 2013. The syndicated facility
was originally put in place in 2006 to fund the acquisition of Sanef S.A.
("Sanef") by a consortium comprising Abertis Infraestructuras,
S.A. ("Abertis"), Caisse des Dépôts
group ("CDC") and other French institutional investors.
The Baa2 rating reflects: (i) the low business risk associated with
Sanef's toll-road operations, which comprise essential
motorway links in France and are exposed to limited competition;
(ii) the strong fundamentals of Sanef's service area, which
benefits from a diversified user base; and (iii) a well-established
and generally supportive concession framework in France. The rating
is, however, constrained by a high level of gearing at HIT
group and Sanef's investment programme in light of a remaining concession
life of 18 years.
Furthermore, HIT's Baa2 rating takes into account the structural
subordination of current and future anticipated debt. Sanef is
HIT's only asset and thus the company has to rely on dividends upstreamed
from Sanef to service its debt. Therefore, Moody's
has lowered the holding company rating by one notch from the consolidated
group's credit quality, which the rating agency considers
to be consistent with the upper end of the Baa range.
HIT's largest single shareholder is Abertis, which holds 52.55%
of the company's share capital. The remaining shares are
held by a number of French institutional investors, including CDC
with a 20% stake (notably through its subsidiary CDC Infrastructure,
which holds 10% of the share capital). Moody's considers
that, at present, there is no direct linkage between HIT's
rating and the credit quality of any single shareholder. This view
is based on (i) the terms of the current shareholder agreement and associated
arrangements; and (ii) the absence of any conditions in the funding
arrangements of HIT group, which could create common credit exposure
(e.g. cross-default clauses). Moody's
notes, however, that a material change in HIT's financial
policies, were this to be agreed among the company's shareholders,
could affect its rating.
Moody's also notes that the terms of certain financing arrangements
at the level of both Sanef and HIT include "change of control"
language. A mandatory prepayment under some of these facilities
would be triggered by (i) a reduction in Abertis's shareholding
in HIT to below 40%; or (ii) the original shareholders maintaining
less than 51% of HIT's share capital. In addition,
there is a trigger in the Sanef facility, which is directly linked
to the rating of the company and thus to a certain extent would be beyond
the control of the management of HIT or Sanef.
In Moody's view, to support the current rating, HIT
would need to achieve a concession life coverage ratio of 1.6x
on a sustained basis and a funds from operations (FFO)/debt ratio in double
figures in 2013. The rating agency's guidance in respect
of HIT's FFO/debt ratio will become tighter as the weighted-average
concession life shortens and to reflect the associated reduction in the
company's debt capacity.
The outlook for HIT's rating is stable. Moody's considers
that there is limited headroom at the current rating level and has factored
in some degree of improvement in HIT's credit metrics, albeit
very gradual given Sanef's capital investment spending commitment.
The current stable outlook is predicated on the anticipated partial refinancing
of the EUR1.3 billion syndicated bank facility at HIT with the
proceeds from the Notes resulting in a relaxation of financial covenants,
where there is currently limited headroom. Moody's cautions
that pressure could be exerted on HIT's rating if management does
not take the necessary steps to achieve increased headroom under the current
financial covenants and/ or proceeds of the Notes were to be used to fund
distributions to shareholders.
The principal methodology used in rating HIT was Moody's "Operational
Toll Roads Rating Methodology", published in December 2006.
Holding d'Infrastructures de Transport, headquartered in Paris,
is a holding company of Sanef S.A., one of the main
French motorway concessionaires. Sanef and its subsidiary,
Societe des Autoroutes Paris Normandie ("SAPN"), operate
a 1,743 km network of tolled motorways in the North-East
of France, including links from Paris to Calais, Brussels,
Luxembourg, Frankfurt and Strasbourg under two agreements signed
with the French State and expiring in 2029. HIT acquired 100%
Sanef's shares on 3 February 2006. HIT is owned by a consortium
comprising the Spanish infrastructure group Abertis (52.55%),
CDC group (20%) and a number of other French insurance companies
and industrial holdings.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's Investors
Service information, and confidential and proprietary Moody's
Analytics information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of assigning
a credit rating.
The rating has been disclosed to the rated entity or its designated agents
and issued with no amendment resulting from that disclosure.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entity or its related third parties within the
three years preceding the Credit Rating Action. Please see the
ratings disclosure page www.moodys.com/disclosures on our
website for further information.
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.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service 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
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
London
Joanna Fic
Analyst
Infrastructure Finance
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
London
Monica Merli
MD - Infrastructure Finance
Infrastructure Finance
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
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Moody's assigns Baa2 rating to HIT Finance's EUR750 million notes due 2018
