Fitch Takes Rating Action on Two Availability Projects; Applies Revised Criteria

MONTERREY, Mexico--(BUSINESS WIRE)-- Fitch Ratings has affirmed the 'BBB-' ratings assigned to Fermaca Enterprises, S. de R.L. de C.V. (Fermaca) and Abengoa Transmision Sur S.A. (ATS) notes. The Rating Outlook for both remains Stable. Fitch's review follows the recent publication of its revised 'Rating Criteria for Availability-Based Projects' on Oct. 14, 2015.

Under the new criteria, Fitch evaluates a project's overall cost risk utilizing three sub-factors: scope risk, cost predictability and cost volatility/structural protections. The ratings also take into account realistic outside cost (ROC) estimates, indicative debt service coverage ratios (DSCR) thresholds and breakeven analysis. The ratings further reflect evaluation of revenue risk and debt structure.

Fitch assigned an overall cost score of 'Midrange' to both, Fermaca and ATS, mainly due to: i) projected low life cycle costs relative to revenue, ii) high level cost analysis from technical advisor, iii) operators with significant experience, and iv) project's costs comparable to similar projects.

Fermaca's rating affirmation at 'BBB-' reflects Fitch's Midrange assessment of the project's exposure to cost risk under the revised availability criteria, with an all cost breakeven of 155%, which translates into a ROC multiple of over 18x. The overall Midrange cost risk assessment is derived from Midrange assessments of scope risk and a Stronger assessment of cost predictability and cost volatility & structural protections. The project benefits from a stable DSCR profile that is consistent with the 'BBB-' level under the revised criteria.

ATS's rating affirmation reflects Fitch's Midrange assessment of the project's exposure to cost risk under Fitch's revised availability criteria with an all cost breakeven of 150%, which translates into a ROC multiple of over 20x. The overall Midrange cost risk assessment is derived from Midrange assessments of scope risk and cost predictability and a Stronger assessment for cost volatility & structural protections. Despite financial metrics that indicate the potential to be rated higher, Fitch has kept the rating unchanged until the impact of Abengoa, S.A. filing for protection under the Spanish Insolvency Law on the project is more clear.

RATING SENSITIVITIES

These rating actions purely reflect the update to Fitch's rating criteria. As such the rating sensitivities remain unchanged from Fitch's previous publications. For additional details, see:

--Fitch Affirms Fermaca Enterprises' Sr. Debt at 'BBB-'; Outlook Stable', dated April 10 2015;

--Fitch Affirms Abengoa Transmission Sur S.A.'s Sr Secured Notes 'BBB-'; Outlook Stable, dated April 14 2015.

Additional information is available on www.fitchratings.com

Applicable Criteria

Rating Criteria for Availability-Based Projects (pub. 14 Oct 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871036

Rating Criteria for Infrastructure and Project Finance (pub. 28 Sep 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=870967

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=998197

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998197

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160121006470/en/

Fitch Ratings
Primary Analyst
Astra Castillo
Director
+52-81-8399-9100
Fitch Mexico S.A. de C.V.
Prol. Alfonso Reyes 2612
Monterrey, Mexico 64920
or
Secondary Analyst
Jorge Torres
Analyst
+52-81-8399-9100
or
Committee Chairperson
Scott Zuchorski
Senior Director
+1-212-908-0659
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
[email protected]

Source: Fitch Ratings

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