NEW YORK--(BUSINESS WIRE)--Fitch Ratings has published an exposure draft outlining the agency's proposed global approach to rating the obligations of a public sector grantor under a concession, lease or other agreement used to support a public private partnership (PPP) financing for public infrastructure assets.
This is the first stand-alone criteria that Fitch has published on its approach to assessing the credit quality of public sector counterparty obligations in PPP transactions. Such ratings are an input in the rating process for PPP transactions. To date, counterparty assessments have been done using more general tax-supported criteria.
Public sector counterparties considered in these criteria are sovereign, state, provincial, regional and local governments, departments and agencies thereof, as well as public sector entities.
The criteria establish a globally consistent framework to determine if the PPP framework agreement qualifies for assignment of a counterparty rating. It then defines the extent of notching from the general credit quality of the public sector counterparty applied to reflect any perceived higher risk of default under a framework agreement. It also provides guidance on how to consider the PPP obligation in the public sector counterparty's general credit rating as well as how late payment or rejection of an obligation under the framework agreement would be reflected in the counterparty's IDR.
Fitch invites feedback from market participants on the proposed criteria. Comments should be sent to email@example.com by June 22, 2015.
In accordance with regulatory requirements, at the end of this period Fitch will publish the results of the consultation. We will then publish the final criteria.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research: Exposure Draft: Rating Public Sector Counterparty Obligations in PPP Transactions