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S&P places Atlantia on CreditWatch Negative due to operational, regulatory risks

S&P Global Ratings placed the ratings of Italian infrastructure company Atlantia SpA on CreditWatch Negative due to increased operational and regulatory risks associated with the concession operated by subsidiary Autostrade per l'Italia SpA, or ASPI, which may weaken Atlantia's creditworthiness.

The rating agency noted that the Italian parliament may revoke a law that governs the legal framework of the ASPI concession, in the wake of major bridge collapses in 2018 and 2019, which have increased negative political sentiment toward Atlantia.

The law's cancellation may weaken ASPI's contractual protection and lead to an agreement between Atlantia and the Italian government on less favorable terms for ASPI, according to S&P Global Ratings.

"In an extreme scenario, if the ASPI concession is revoked with no termination payment, in our view this could trigger a liquidity event notably for ASPI, which could be extended to Atlantia," the rating agency said.

An outright cancellation of ASPI's toll road concession could lead to a ratings downgrade of more than one notch for both Atlantia and ASPI, S&P Global Ratings said. The companies could also be hit with a one-notch downgrade if Atlantia's funds from operations-to-debt ratio falls below 10%, or if ASPI loses its legal protections.

"The extent of any downgrade would depend on what decision is taken or agreed with ASPI, and what effect this may have on Atlantia's financial metrics, the strengths of its business, and its liquidity," the rating agency said.

Atlantia and ASPI hold issuer credit ratings of BBB-/A-3.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.