With approximately 96% of toll road rating outlooks remaining stable, meaningful changes to ratings in the near to medium term are not expected, according to a Fitch Ratings report.
"Since the 2013 Peer Review, Fitch has taken three positive and two negative rating actions or Outlook revisions. Of the six rating factors Fitch reviews for each credit rating, only 10% of the individual attribute scores were revised since 2013, with 12 scores revised upwards. Only one of these revisions resulted in a rating or outlook revision," said Saavan Gatfield, Senior Director.
The six rating factors reviewed for each credit rating are completion risk; revenue - volume risk; revenue - price risk; infrastructure development and renewal; debt structure; and debt service and counterparty risk.
Toll roads with the highest ratings are typically the larger networks, with a relatively wide geographic footprint, diversified journeys by start- and end-points and by journey type. They typically have low or moderate current toll rates with ample rate-making flexibility to counteract potential demand contractions in the future. The highest ratings are reserved for low or moderately leveraged facilities of these types.
Given the exposure to smaller communities and economic drivers, small networks and stand-alone facilities typically must demonstrate stronger financial metrics than large, diversified networks at the same rating. Fitch believes it is highly unlikely that ratings above the A category would be assigned to this subset, regardless of leverage or any other key rating factor assessments.
Debt raised by private sector stand-alone toll road concessions is typically rated in the BBB category or lower, reflecting the more leveraged structures employed to generate equity returns.
