MONTERREY, Mexico--(BUSINESS WIRE)--Link to Fitch Ratings' Report: Mexican Toll Road Forecasts (A Historical
Analysis of Performance)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=829828
Third-party traffic and revenue forecasts for toll roads continue to overestimate traffic, resulting in varying impacts on financial performance, according to a Fitch Ratings report.
'The bias towards optimism is a constant, which can increase risk over time,' said Director Astra Castillo.
Fitch reviewed 41 traffic estimates received between 2002 and 2013. Six (15%) of the 41 forecasts underestimated traffic, while 14 (34%) were basically on target. However, just four of those 14 are more than three years old. Additionally, 21 (51%) present some level of overestimation with 12 cases (29%) falling into the "substantial" and "significant" categories.
Because long-term traffic estimates are heavily dependent on the compounding of growth, having lower-than-expected growth especially early increases the pressure on future performance. As time goes on, it becomes harder for a road to return to its original projected volumes. The revenues that were not generated during the low-performance years will be permanently lost.
In general, Fitch's traffic scenarios tend to be more conservative than those of the traffic and revenue reports, especially regarding ramp-up and long-term growth rates. That is why even though some assets have performed below the forecasts, most have been at or above Fitch's base case estimations, providing for observed overall rating stability.
Fitch's special report, 'Mexican Toll Road Forecasts' is available at 'www.fitchratings.com' or by clicking on the above link.
Additional information is available at 'www.fitchratings.com'.
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