Reuters logo
Fitch Affirms TrentinoSviluppo at 'A-', Outlook Negative
December 7, 2016 / 2:51 PM / a year ago

Fitch Affirms TrentinoSviluppo at 'A-', Outlook Negative

(The following statement was released by the rating agency) MILAN/LONDON, December 07 (Fitch) Fitch Ratings has affirmed Trentino Sviluppo's (TS) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'A-' and Short-Term Foreign Currency IDR at 'F2'. The Outlooks are Negative. The affirmation and Negative Outlooks reflect Fitch's expectation that TS's financial profile will remain sound in the medium term, due to potential extraordinary support from the Autonomous Province of Trento (PAT, A/Negative), which is TS's sponsor in case of need (see 'Fitch Affirms Italian Autonomous Province of Trento at 'A'; Negative Outlook' dated 2 December 2016 at www.fitchratings.com). The Negative Outlook reflects that on PAT, which is in turn affected by Italy's sovereign Negative Outlook. KEY RATING DRIVERS The ratings affirmed reflect the following rating drivers: Link to PAT TS is a limited liability company fully owned by PAT, which has extensive control and oversight over its operations. TS has moderate strategic importance for and integration with PAT, as mirrored by the lack of a formal guarantee of TS's liabilities. Nevertheless, Fitch believes that extraordinary support from PAT would be highly probable and timely, in case of need. Therefore, TS is classified as a credit-linked public-sector entity under Fitch's criteria and its ratings are notched down one level from those of PAT. As announced by the province, TS will merge with Tecnofin Trentina (Tecnofin), a local investment holding whose core asset is the indirect control of power utility Dolomiti Energia Spa (DE). The merger, to be completed by end-2016, is part of a more comprehensive plan set out by the province to reduce the number of public sector entities to six from 14. This is to achieve synergies and savings and enhance their decision-making process. Strategic Importance TS's core mandate is to manage provincial funds (the main one being Fund 33-34) on behalf of PAT for a fee. The 10 provincial funds under management, with assets totalling approximately EUR1bn as of end-1H16, have their own balance sheets and separate income statements from those of TS and a funding structure largely based on grants from PAT. The funds managed on behalf of PAT are segregated from TS's assets and are reported below the line of PAT's balance sheet. Therefore, in the event of the funds' insolvency, creditors have a claim only on the specific funds' assets, leaving TS's balance sheet unaffected. In case of insufficient assets in a fund to satisfy potential creditors, no recourse to PAT's or to TS's assets is envisaged. However, Fitch believes PAT may decide to intervene and repay the funds' creditors. Control and Oversight The relationship between TS and PAT is regulated by an agreement (the Convenzione), covering issues pertaining to operations, investment as well as borrowing decisions, and the sponsor also appoints the board of directors and auditors. TS's mandate is the provision of services to support local companies through the purchase, sale and leasing of assets, operated via equity injections or, mostly, via financial leases. Fair Integration TS receives rents mainly generated from the Fund 33-34 portfolio of assets and in case of insufficient rental income, the Provincial Law 6/99, art 33, 8ter states that PAT would cover the gap, although this statutory guarantee may not be available on credit lines not originated under back-to-back transactions. As for funds directly managed by TS in the size of EUR80m, they are directly funded by the sponsor by means of a shareholder loan maturing in 2021 and carry no interest. Sound Creditworthiness amid Growing Debt Fitch expects TS's financial profile to remain sound in the medium term with a balanced income statement. Fitch expects that after the acquisition of Tecnofin is completed, it will keep TS's equity-to-total asset ratio substantially unchanged at 60%. TS's net worth will grow by approximately EUR20m to nearly EUR220m, as a result of EUR70m financial assets netted of a EUR50m bond due 2021. While EUR12m cash available at Tecnofin will be used to pay off TS's short term debt, total debt will grow to nearly EUR60m in 2016 from EUR10m in 2015. Annual retention of dividends from DE of EUR5m-EUR7m will partially fund the bullet repayment of the bond at maturity in 2021, and the expected shortfall of EUR25m-EUR35m will not represent refinancing risk until closer to maturity. RATING SENSITIVITIES TS's IDRs are are sensitive to a change in the sponsor's ratings. More formalised support from PAT, such as a full guarantee on all financial liabilities, could trigger an upgrade of TS's ratings, leading to rating equalisation with PAT. Conversely a dilution of PAT's ownership or income losses not compensated by support from PAT may lead to a downgrade, thereby widening TS's rating differential from the sponsor. Contact: Primary Analyst Gian Luca Poggi Director +39 02 87 90 87 293 Fitch Italia S.p.A. Via Morigi 6 Milan 20123 Secondary Analyst Federica Bardelli Associate Director +39 02 87 90 87 261 Committee Chairperson Vladimir Redkin Senior Director +7 495 956 2405 Media Relations: 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 _id=1016017 Solicitation Status here 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. 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. 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

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