CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed the ratings on four transactions related to the financing of Peru's IIRSA Sur and IIRSA Norte. A full list of rating actions follows at the end of this release.
These transactions are backed by Certificados de Reconocimiento de Pago Anual de Obras (CRPAOs), certificates issued by the Government of Peru (GOP) through the Ministry of Transportation and Communications (MTC). CRPAOs are delivered from the GOP to concessionaires as compensation for advances on works on the Interoceanica Sur and Interoceanica Norte as part of the initiative 'Integracion de la Infraestructura Regional Sudamericana' (IIRSA).
The ratings address timely payment of interest on a semi-annual basis and payment of principal at legal maturity.
KEY RATING DRIVERS
-- STRENGTH OF THE GOVERNMENT OBLIGATION:
CRPAOs are direct, general, irrevocable, unconditional, unsubordinated and unsecured obligations of the GOP. The obligations are included in the GOP's multiyear budgetary projections and while legally different from public debt, are governed by New York State law, and cross-default with other CRPAOs. GOP has made all payments on a timely basis since 2006 when they were first used to finance infrastructure projects.
To determine the strength of the government obligation and its differentiation from the relevant sovereign Issuer Default Rating (IDR), Fitch incorporated perspectives from its sovereign group and determined that the credit quality of the obligation is commensurate with the ratings of the transactions.
-- NO EXPOSURE TO CONSTRUCTION/PERFORMANCE RISK:
Once issued, the GOP's obligation to pay on CRPAOs is completely delinked from the construction completion of the roads, its operation and maintenance, and traffic volumes.
-- RATING LINKED TO SOVEREIGN IDR
Given the nature of the payment obligations backing the transaction, Fitch determined that the transactions ratings described in this commentary, with the exception of the IIRSA Norte Finance Limited 2006-1 rating, are linked to Peru's Long-Term Foreign Currency (FC) IDR of 'BBB+'. The IIRSA Norte Finance Limited 2006-1 I rating is linked to the Local Currency (LC) IDR of Peru as the payment obligations benefit from an IDB guarantee which provides additional liquidity protections to mitigate certain sovereign risks including transfer and convertibility.
-- IDB PARTIAL CREDIT GUARANTEE:
IIRSA Norte Finance benefits from a USD60 million partial credit guarantee (PCG) provided by the Inter-American Development Bank (IDB; FC IDR 'AAA'/Stable Outlook). The PCG can be used to cover 2-3 years of debt service payments, reducing the bonds' potential for default and allowing the transaction be rated at Peru's LC IDR. The USD60 million PCG is approximately 40% of the notes and will continue to grow as a percentage, eventually covering 100% of the note balance.
The transaction ratings described in this commentary, with the exception of the IIRSA Norte Finance Limited 2006-1 rating, are subject to changes in Peru's Long-Term FC IDR.
The rating of IIRSA Norte Finance Limited 2006-1 is subject to changes in Peru's long-term LC IDR.
DUE DILIGENCE USAGE
No third-party due diligence was provided to or reviewed by Fitch in relation to this rating action
Fitch has affirmed the following ratings:
IIRSA Norte Finance Limited (IIRSA Norte)
--Series 2006-1 at 'A-'.
Interoceanica IV Finance Limited (InterSur)
--Series 2007-1 at 'BBB+';
--Series 2007-2 at 'BBB+'.
Peru Enhanced Pass-Through Finance Limited (IIRSA Sur)
--Class A-1 at 'BBB+';
--Class A-2 at to 'BBB+'.
Interoceanica V Finance Ltd. (IIRSA Sur Tramo V)
--Series 2008-1 at 'BBB+';
--Series 2008-2 at 'BBB+';
--Series 2008-3 at 'BBB+'.
The Rating Outlook is Stable.
Additional information is available at www.fitchratings.com.
Sources of Information:
In addition to the sources of information identified in the master criteria, this action was additionally informed by the respective trustee.
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)
Criteria for Country Risk in Global Structured Finance and Covered Bonds (pub. 26 Sep 2016)
Global Rating Criteria for Single- and Multi-Name Credit-Linked Notes (pub. 08 Mar 2016)
Global Structured Finance Rating Criteria (pub. 27 Jun 2016)
Dodd-Frank Rating Information Disclosure Form
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