CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed the ratings assigned to the notes issued by Taboada Finance Limited, a special purpose company incorporated in the Cayman Islands, as follows:
--Series 2011-1 S/. 572,089,000 notes due 2029 at 'BBB+';
--Series 2011-2 S/. 220,250,000 notes due 2033 at 'BBB+';
--Series 2011-3 S/. 59,133,000 notes at 'BBB+.
The Rating Outlook remains Stable.
The underlying issuance is a securitization of rights to receive future payments from Servicio de Agua Potable y Alcantarillado de Lima (SEDAPAL), the Peruvian state-owned water utility company for the districts of Lima and Callao. Payment rights, in the form of Retribucion por Inversiones (RPIs), are related to the construction of Planta de Tratamiento de Aguas Residuales Taboada (Taboada), a wastewater treatment plant by ACS Servicios, Comunicaciones y Energia S.L. (ACS). ACS is the primary sponsor of the transaction through its local concessionaire, Planta de Tratamiento de Aguas Residuales Taboada S.A. (PTAR Taboada). Repayment of the notes is supported by a contingent guarantee of the government of Peru (GOP) through the Ministry of Housing, Construction and Sanitation (MVCS) to provide for any debt service shortfalls.
KEY RATING DRIVERS
The international local currency (LC) rating affirmation reflects (i) the strength of the sovereign's contingent guarantee of RPICAO payments if water utility bill payments to SEDAPAL do not sufficiently cover debt service, (ii) the finalization of the construction of the Taboada project and (iii) the funding of the 2011-3 notes.
On Sept. 30, 2014, Fitch affirmed Peru's foreign currency (FC) and LC ratings at 'BBB+' and 'A-', respectively, with a Stable Rating Outlook. The GOP will guarantee the RPI payments related to the construction of the Taboada project if water utility bill payments received by SEDAPAL through the banking system are not sufficient to cover debt service. In Fitch's view, SEDAPAL's ability to issue more debt from its master trust and use more assigned flows heightens the transaction's reliance on the guarantee.
On February 2014, the construction of the Taboada project finalized and all of the Certificado por Avance de Obras (CAOs) related to the construction of the project were recognized. Once a CAO is issued, it becomes an unconditional and irrevocable obligation of SEDAPAL.
The S/. 59,133,000 funding of the 2011-3 after the completion of the construction of the project has always been incorporated in Fitch's analysis, and, in the agency's view, this event does not affect the ratings of the transaction. Fitch confirmed that prior conditions for the funding of the 2011-3 notes have been fully satisfied. They included: (i) 100% of the CAOs have been issued; (ii) excess RPICAO payments exist and (iii) the sum of the debt service of the three series for each quarter is not greater than the amount of payable RPICAOs in the same quarter.
RATING SENSITIVITIES
The ratings are sensitive to changes in Peru's LC IDR and to a lesser extent, the cash flow generation and performance risk of SEDAPAL. While the rating of the transaction will be sensitive to downgrades of the LC IDR assigned to Peru, an upgrade to the IDR will not automatically lead to an upgrade of the transaction rating. In addition, severe reductions in coverage levels or an increase in debt levels could also result in rating downgrades.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (August 2014);
--'Future Flow Securitization Rating Criteria' (June 2014);
--'Understanding Government-Backed Securities in Latin America' (September 2014);
--'Peru' (September 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
Future Flow Securitization Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749768
Understanding Government-Backed Securities in Latin America (Financing Development through Structured Finance)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=761707
Peru
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=790728
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=918758
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