Reuters logo
Fitch Affirms Trentino Trasporti at 'BBB+'; Stable Outlook
July 12, 2017 / 1:21 PM / 2 months ago

Fitch Affirms Trentino Trasporti at 'BBB+'; Stable Outlook

(The following statement was released by the rating agency) MILAN/PARIS/LONDON, July 12 (Fitch) Fitch Ratings has affirmed Trentino Trasporti S.p.A.'s (TT) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BBB+' with Stable Outlook. Fitch has also affirmed TT's Short-Term Foreign Currency IDR at 'F2'. The ratings of TT are credit linked to, and notched off once from, those of the Autonomous Province of Trento (PAT; A-/Stable). The ratings primarily reflect the strategic importance TT represents for its 73% shareholder, PAT and the extensive control by and financial support from its sponsor. TT is rated using a top-down approach under Fitch's criteria for rating public-sector entities outside the U.S. The one-notch differential between TT and PAT mainly reflects the lack of consolidation of TT's debt within PAT's financials. KEY RATING DRIVERS Strong Strategic Importance: TT is a pivotal vehicle for implementing PAT's transportation services, is one of the public sector entities (PSEs) that are tightly managed by PAT and receives funding from the province for investments. As mandated by provincial law, TT leases out rolling stock, bus fleets and cable cars for public service to Trentino Trasporti Esercizio (TTE), a fully owned company of the province, based on a service agreement that expires in 2017. Under the public service scheme adopted by PAT, TT's revenue is driven by rental income, which combined with PAT's subsidies, accounted for nearly 80% of TT's total revenue in 2016. As part of a restructuring of the province's PSEs, PAT plans to merge TT and TTE and the local small airport to achieve synergies, cost savings and improve governance. The merger will be effective from 1 January 2018. As TTE is debt-free the merger should not result in a material impact on the combined entity's financial profile provided that PAT's financial support scheme remains unchanged. Strong Control, Mid-range Integration: TT acts under tight supervision from PAT. Board members of TT and TTE are mostly appointed by the province to ensure ease of strategy implementation for the public service sector. Under the provincial financial scheme PSEs such as TT fund their investments with their own debt that are subsidised or guaranteed by the province. The track record of funding from PAT to support TT's capex and its guarantees to back TT's loans underpin Fitch's view that extraordinary support from the province is highly likely in case of need, hence limiting the rating differential to one notch. PAT is a full guarantor of TT's EUR70 million loans with the European Investment Bank (EIB) although TT's debt is not consolidated within PAT's accounts. Legal Status Mid-range: Fitch views TT's legal links with the sponsor as mid-range and therefore moderately supportive of the company's credit quality. TT's by-law, whose modification would require PAT's approval, stipulates that the province's stake - alone or together with other public entities - cannot fall below 51% of TT's equity from the current 73% shareholding. TT plans to invest nearly EUR120 million over 2017-2019, mainly to upgrade its railway network, trains and the bus depot system and to purchase trains and buses. Funding will come from a combination of sponsor-provided capital transfers, drawings under existing facilities with EIB and market debt backed by a full and an unconditional guarantee from the province. As a result, Fitch expects TT's debt to exceed EUR115 million by 2019, putting pressure on the company's liquidity over the medium term. However, these funding requirements will not add material pressure to PAT as total risk from its PSE network represents less than 10% of the province's revenue. RATING SENSITIVITIES As TT's IDR is credit-linked to the province's rating, it is sensitive to changes to the province's ratings. A dilution of provincial support as evidenced by material unsubsidised borrowing or income losses not compensated by support from PAT may lead to a downgrade, thereby widening the rating differential between TT and PAT to two notches. Consolidation of TT's debt into PAT's budget and full guarantee from the province on all of TT's financial liabilities may lead to an upgrade. Contact: Primary Analyst Gian Luca Poggi Director +39 02 87 90 87 293 Fitch Italia - Societa Italiana per il Rating S.p.a. Via Morigi, 6 20123 Milan Secondary Analyst Federica Bardelli Associate Director +39 02 87 90 87 261 Committee Chairperson Christophe Parisot Managing Director +33 1 44 29 91 34 Media Relations: Stefano Bravi, Milan, Tel: +39 02 879 087 281, Email: stefano.bravi@fitchratings.com; Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria International Local and Regional Governments Rating Criteria - Outside the United States (pub. 18 Apr 2016) here Rating of Public-Sector Entities – Outside the United States (pub. 22 Feb 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below