CHICAGO--(BUSINESS WIRE)--Fitch Ratings affirms the ratings of 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 advance 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 risks:
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:
On Sept. 30, 2015, Fitch affirmed Peru's long-term foreign (FC) and local currency (LC) IDRs at 'BBB+' and 'A-', respectively, with a Stable Outlook. The country ceiling was affirmed at 'A-'.
-- IDB Partial Credit Guarantee
IIRSA Norte Finance benefits from a USD$60 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 specific debt service payments, reducing the bonds' potential for default.
Additionally, Fitch believes the PCG-protected issuance will have a higher recovery level compared to other issuances backed by CRPAOs. The USD$60 million PCG grows as a percentage of the notes and is currently 33% but will eventually grow to cover 100% of the notes. Together, these factors allow the transaction to be rated one notch above Peru's FC IDR.
RATING SENSITIVITIES
The ratings on the transactions are subject to changes in Peru's long-term FC IDR.
The rating of IIRSA Norte Finance Limited may also be sensitive to the rating of the IDB, as Fitch will not rate the transaction higher than the partial guarantee provider.
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.
Applicable Criteria
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158
Criteria for Evaluating Third-Party Partial Credit Guarantees (pub. 05 Aug 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=753342
Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=992579
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=992579
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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