Fitch Ratings has affirmed the ratings assigned to IIRSA Norte Finance Limited, Peru Enhanced Pass-Through Finance Limited (IIRSA Sur), Interoceanica IV Finance (Intersur), and Interoceanica V Finance Ltd. (IIRSA Sur Tramo V). All four are Peruvian securitizations of government payment obligations in connection with toll road concessions. In addition, the Rating Outlooks are revised to Positive from Stable.
The affirmation of the ratings and change in Outlook follow as a result of the affirmation of the long-term foreign currency Issuer Default Rating (IDR) of Peru at 'BBB-', and the revision in its outlook to Positive from Stable on June 02, 2010.
Fitch has affirmed the following, and the Outlook revised to Positive:
IIRSA Norte Finance Limited
--Series 2006-1 affirmed at 'BBB'.
Interoceanica IV Finance (Intersur)
--Series 2007-1 affirmed at 'BBB-';
--Series 2007-2 affirmed at 'BBB-'.
Peru Enhanced Pass-Through Finance Limited (IIRSA Sur)
--Class A-1 affirmed at 'BBB-';
--Class A-2 affirmed at 'BBB-'.
Interoceanica V Finance Ltd. (IIRSA Sur Tramo V)
--Series 2008-1 affirmed at 'BBB-';
--Series 2008-2 affirmed at 'BBB-';
--Series 2008-3 affirmed at 'BBB-'.
These transactions are securitizations of CRPAOs (Certificados de Reconocimiento de Pago Annual de Obras), certificates issued by the Government of Peru (GOP) and transferred to concessionaires in compensation for construction progress on specific sections of the Interoceanica Sur and Interoceanica Norte roads. The GOP pays the certificate holders in U.S. dollars. CRPAOs delivered from the GOP to the concessionaire have been sold to the issuer. Once generated, CRPAOs are not subject to any condition or performance obligation relating to the concession agreement. Noteholders are not exposed to construction risk.
Cash flow to maintain timely debt service on the transaction depends on the GOP's continued payment on all issued CRPAOs. CRPAOs are backed by the full faith and credit of the GOP. While legally different from public debt, Fitch views the difference in probability of the GOP honoring one obligation over the other as immaterial. The rationale behind the rating of the notes is similar to a government pass-through.
IIRSA Norte Finance Limited's 'BBB' rating reflects the strength of the underlying CRPAO payments and the enhanced recovery in the event of default derived from the US$60 million PG (partial guarantee) provided by the IDB (Inter-American Development Bank). At all times, the fixed dollar amount PG covers more than 20% of the outstanding balance of the notes and will grow over time as the notes amortize.
The ratings assigned to these transactions reflect Fitch's "Global Structured Finance Rating Criteria." The rating assigned to IIRSA Norte Finance Limited also reflects the principles under Fitch's "Criteria for Partial-Credit Guarantees in Emerging Markets."
Additional information on these rating actions can be found at www.fitchratings.com.
Additional information is available at www.fitchratings.com.
Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326
Criteria for Partial-Credit Guarantees in Emerging Markets
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=460786
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