OREANDA-NEWS. Fitch Ratings says Abertis Infraestructuras S.A's planned acquisition of 51.4% of A4 Holding that owns ABVP (Autostrada Brescia-Verona-Vicenza-Padova S.p.A) has no impact on the ratings of Abertis and ABVP. Abertis is rated 'BBB+' with Stable Outlook and ABVP is rated 'BB+', which has a Negative Outlook.

ABVP comprises Italian toll road assets, A4 Brescia - Padova and A31. The EUR594m consideration will be paid in January 2023. The acquisition is contingent upon the approval of the A31 extension (The Valdastico North Project).

In Fitch's view the acquisition would fall outside of the recourse business perimeter of Abertis - the Spanish toll road business - as both A4 Holding and ABVP are and will continue to be financed with non-recourse debt. As a result, the change of ownership would not affect ABVP's rating and would not alter Abertis' current recourse business perimeter.

We view positively that the consideration for the acquisition is deferred to 2023, as it would allow Abertis to gain control of the asset and benefit from the dividend flows of the concession at the closing and, if needed, give Abertis the time to dispose some of non-core assets ahead of funding the acquisition.

The closing of the deal is subject to Italian government's approval of the extension of the A31 but there is no visibility on the timing of this approval. However, our extended forecast exercise shows that, even when the planned A4 holding acquisition is taken into account, Abertis' leverage will remain below the 4x mark, mostly as a result of expected progressive reduction of recourse debt. As a result we are maintaining Abertis' Long-Term Issuer Default Rating at 'BBB+' with Stable Outlook.

On 10 May 2016, Abertis also issued a-10 year bond of EUR1,150m at an attractive coupon of 1.375% to refinance its maturing debt. The new bond allows Abertis to reduce the cost of corporate debt to 3.2% and extend its maturity to 7.8 years. Proceeds of the issue will be mainly used to prefund the upcoming debt maturities of 2016 and 2017.

Nevertheless, we reiterate that ratings could be downgraded if Fitch-adjusted net leverage exceeds the 4x mark, a level currently commensurate with Abertis' current rating. The leverage guidance may be revised downwards if the cash flow of non-recourse assets and their dividends distributions demonstrate a high volatility. Any deviation from the expected progressive reduction of its recourse debt could also be rating-negative.

Abertis is a Spanish-based infrastructure group and also the largest toll road operator globally. It has diversified from its core network by expanding mainly to France and Latin American toll roads in Brazil and Chile.

Our analysis focuses on the Spanish toll road business (recourse business perimeter) as the rated debt is primarily serviced from the cash flow of these entities, which Abertis finances mainly via intercompany loans. Under our approach, the businesses funded with non-recourse debt contribute to the recourse business perimeter through dividend distributions.