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Fitch Affirms Ratings on Peruvian CRPAO Securitizations; Outlook Stable
October 7, 2016 / 8:12 PM / in a year

Fitch Affirms Ratings on Peruvian CRPAO Securitizations; Outlook Stable

(The following statement was released by the rating agency) CHICAGO, October 07 (Fitch) Fitch Ratings has affirmed the ratings on four transactions related to the financing of Peru's IIRSA Sur and IIRSA Norte. A full list of rating actions follows at the end of this release. These transactions are backed by Certificados de Reconocimiento de Pago Anual de Obras (CRPAOs), certificates issued by the Government of Peru (GOP) through the Ministry of Transportation and Communications (MTC). CRPAOs are delivered from the GOP to concessionaires as compensation for advances on works on the Interoceanica Sur and Interoceanica Norte as part of the initiative 'Integracion de la Infraestructura Regional Sudamericana' (IIRSA). The ratings address timely payment of interest on a semi-annual basis and payment of principal at legal maturity. KEY RATING DRIVERS -- STRENGTH OF THE GOVERNMENT OBLIGATION: CRPAOs are direct, general, irrevocable, unconditional, unsubordinated and unsecured obligations of the GOP. The obligations are included in the GOP's multiyear budgetary projections and while legally different from public debt, are governed by New York State law, and cross-default with other CRPAOs. GOP has made all payments on a timely basis since 2006 when they were first used to finance infrastructure projects. To determine the strength of the government obligation and its differentiation from the relevant sovereign Issuer Default Rating (IDR), Fitch incorporated perspectives from its sovereign group and determined that the credit quality of the obligation is commensurate with the ratings of the transactions. -- NO EXPOSURE TO CONSTRUCTION/PERFORMANCE RISK: Once issued, the GOP's obligation to pay on CRPAOs is completely delinked from the construction completion of the roads, its operation and maintenance, and traffic volumes. -- RATING LINKED TO SOVEREIGN IDR Given the nature of the payment obligations backing the transaction, Fitch determined that the transactions ratings described in this commentary, with the exception of the IIRSA Norte Finance Limited 2006-1 rating, are linked to Peru's Long-Term Foreign Currency (FC) IDR of 'BBB+'. The IIRSA Norte Finance Limited 2006-1 I rating is linked to the Local Currency (LC) IDR of Peru as the payment obligations benefit from an IDB guarantee which provides additional liquidity protections to mitigate certain sovereign risks including transfer and convertibility. -- IDB PARTIAL CREDIT GUARANTEE: IIRSA Norte Finance benefits from a USD60 million partial credit guarantee (PCG) provided by the Inter-American Development Bank (IDB; FC IDR 'AAA'/Stable Outlook). The PCG can be used to cover 2-3 years of debt service payments, reducing the bonds' potential for default and allowing the transaction be rated at Peru's LC IDR. The USD60 million PCG is approximately 40% of the notes and will continue to grow as a percentage, eventually covering 100% of the note balance. RATING SENSITIVITIES The transaction ratings described in this commentary, with the exception of the IIRSA Norte Finance Limited 2006-1 rating, are subject to changes in Peru's Long-Term FC IDR. The rating of IIRSA Norte Finance Limited 2006-1 is subject to changes in Peru's long-term LC IDR. DUE DILIGENCE USAGE No third-party due diligence was provided to or reviewed by Fitch in relation to this rating action Fitch has affirmed the following ratings: IIRSA Norte Finance Limited (IIRSA Norte) --Series 2006-1 at 'A-'. Interoceanica IV Finance Limited (InterSur) --Series 2007-1 at 'BBB+'; --Series 2007-2 at 'BBB+'. Peru Enhanced Pass-Through Finance Limited (IIRSA Sur) --Class A-1 at 'BBB+'; --Class A-2 at to 'BBB+'. Interoceanica V Finance Ltd. (IIRSA Sur Tramo V) --Series 2008-1 at 'BBB+'; --Series 2008-2 at 'BBB+'; --Series 2008-3 at 'BBB+'. The Rating Outlook is Stable. Contacts: Primary Analyst Associate Director +1-312-606-2330 Fitch Ratings, Inc. 70 W. Madison St. Chicago, IL 60602 Committee Chairperson Greg Kabance Managing Director +1-312-368-2052 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: Additional information is available at Sources of Information: In addition to the sources of information identified in the master criteria, this action was additionally informed by the respective trustee. Applicable Criteria Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016) here Criteria for Country Risk in Global Structured Finance and Covered Bonds (pub. 26 Sep 2016) here Global Rating Criteria for Single- and Multi-Name Credit-Linked Notes (pub. 08 Mar 2016) here Global Structured Finance Rating Criteria (pub. 27 Jun 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1012849 Solicitation Status here Endorsement Policy here ail=31 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. 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 © 2016 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. 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