Fitch Expects to Rate ENA Este Trust USD212MM Senior Debt 'BBB-'

NEW YORK--()--Fitch Ratings expects to rate ENA Este Trust's USD212 million senior notes maturing in 2024 'BBB-(EXP)' and 'AA+(EXP)(pan)'. The Outlook is Stable.

Key Rating Drivers

Fitch's ratings are based on the following factors, among others:

--Completion Risk: According to the independent engineer, the El Golf-Tocumen (Phase II B) construction segment is proceeding at a reasonable pace and expected to be in commercial operation by September 2014. Construction risk is mitigated by robust credit contingencies, over 70% completion, and an experienced contractor. [Completion Risk: Midrange]

--Essential Transportation Asset: Phase IIB is part of Corredor Norte which is an instrumental road for commuters and commercial traffic. The road connects Albrook airport in the West, to Tocumen airport in the eastern part of Panama City. The road serves a large commuter base with growing economic and commercial activities. [Volume Risk: Midrange]

--Sufficient Tariff Levels: Price risk is viewed as a concern, since tariff levels may be adjusted up to inflation only and are subject to government review. Still, price elasticity of demand at Corredor Norte has shown positive historical behaviour, which is primarily a reflection of the evolving traffic trends in Panama City. [Price Risk: Midrange]

--Adequate structural features: The project is structured with a pass-through amortization scheme that prohibits cash distributions while the notes are outstanding and employs all excess cash for the repayment of principal. Liquidity reserves, particularly for debt service, are considered robust to maintain financial stability during stressed periods. [Debt Structure: Stronger]

--Adequate Debt Service: Fitch's base case projected DSCR is 1.20x minimum and 1.71x average, while the loan life coverage ratio (LLCR) is 1.20x. Under a scenario of increased costs, Fitch's rating case projected DSCR is 1.18x minimum and 1.64x average, while the LLCR is 1.18x.

Rating Sensitivities

Positive

-- Actual traffic performance sustainably and materially better than base case scenario.

Negative

-- Significant and sustained traffic contraction resulting from an adverse economic environment and/or increased modes of competition;

-- Sustainable lag in amount and timing of ENA Sur excess cash flow could pressure financial ratios.

Security

The notes will be secured by the project's toll revenues; all rights, titles, and interests of the ENA Este Trust; and the assigned rights, the transaction accounts, and all of the issued and outstanding shares of ENA Este and ENA Sur Trust excess cash flows.

Transaction Summary

The principal construction consists of the completion of El Golf- Tocumen segment (Phase IIB) expected to be in operation by September 2014. The project involves the construction of a tolled highway with two lanes in each direction. The longitude of Phase IIB is approximately 9.9 km, running in a west to east direction, from the Las Lajas Interchange, at the eastern terminus of Phase IIA, to the 24 de Diciembre segment. Phase IIB will effectively link up with the Panamerican Highway which in turn is a continuation of the eastern terminus of Corredor Sur. In addition, the project includes the construction of the Gonzalillo-Pedregal road segment and an electronic tolling system.

Phase IIB is essentially an extension of Corredor Norte, which is one of two principal roads in Panama. Corredor Norte is a commuting toll road which extends through the northern portion of Panama with over 90% of its traffic composed of automobiles.

ENA Este Trust is the issuer of the notes with Banistmo S.A. acting as trustee for the benefit of noteholders. The trust was capitalized by ENA Este S.A. which transferred its concession rights to the trust. ENA Este S.A. is a subsidiary of Empresa Nacional de Autopista S.A. (ENA). ENA is an entity wholly owned by the government of Panama, with the purpose of acquiring companies that have been granted concessions for the construction, maintenance, and operation of toll roads. ENA is financially autonomous and supervised by the general comptroller of the Republic of Panama.

ENA Este Trust expects to issue USD212 million of notes collateralized by toll collections of four toll plazas including Las Lajas, Villalobos, Rana de Oro and Mananitas.

Debt proceeds are expected to be used to repay a bridge loan (UDS91.9 million) related to the initial Phase IIB construction costs and to finance the remaining construction cost of approximately USD62.9 million. Additional uses include to fund construction cost of USD11 million for the Gonzalillo-Pedregal segment and USD15.5 million for technology improvements, along with a $25 million debt service reserve account. The remaining portion is earmarked for issuance cost, general expenses and to fund other reserve accounts. A USD27 million equity contribution from ENA is expected to be transferred in the debt service reserve account at final closing.

Additional information is available at 'www.fitchratings.com'

Applicable Criteria and Related Research:

--'Rating Criteria for Infrastructure and Project Finance'; Jul. 12, 2012;

--'Rating Criteria for Toll Roads, Bridges, and Tunnels; Oct. 16, 2013.

Applicable Criteria and Related Research:

Rating Criteria for Infrastructure and Project Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682867

Rating Criteria for Toll Roads, Bridges and Tunnels

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720736

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=824992

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.

Contacts

Fitch Ratings
Primary Analyst
Alberto Santos, +1 212-908-0714
Senior Director
Fitch Ratings, Inc.
One State Street Plaza
New York NY 10004
or
Secondary Analyst
Benjamin Tano, +1 212-612-7822
Director
or
Committee Chairperson
Scott Zuchorski, +1 212-908-0659
Director
or
Media Relations, Caracas
Thamar D'Santiago, +58 212 286 3356
thamar.desantiago@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Alberto Santos, +1 212-908-0714
Senior Director
Fitch Ratings, Inc.
One State Street Plaza
New York NY 10004
or
Secondary Analyst
Benjamin Tano, +1 212-612-7822
Director
or
Committee Chairperson
Scott Zuchorski, +1 212-908-0659
Director
or
Media Relations, Caracas
Thamar D'Santiago, +58 212 286 3356
thamar.desantiago@fitchratings.com