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Moody's downgrades Atlantia on rising risks to toll road concessions

Moody's downgraded Italian infrastructure group Atlantia SpA and subsidiaries Autostrade per l'Italia SpA and Aeroporti di Roma SpA in the wake of the Italian government's decision to unilaterally change the terms and conditions of toll road concessions in the country.

The rating agency lowered Atlantia's senior unsecured rating to Ba2 from Ba1. It also downgraded the senior unsecured ratings of toll road operator Autostrade to Ba1 from Baa3 and airport operator Aeroporti di Roma to Baa3 from Baa2. Moody's placed all the ratings under review for further downgrade.

Atlantia and its subsidiaries are expected to be impacted by a government decree that retroactively and unilaterally changes the terms and conditions of toll road concessions in the country. The decree, which will need to be converted into law by parliament within 60 days of its publication, also significantly reduces the amount of compensation that Atlantia would be entitled to receive should the government revoke its license to operate toll roads across Italy.

The legislative action represents a "significant escalation" in tensions between Atlantia and the government since a deadly bridge collapse in 2018, Moody's said, adding that the move increases the likelihood that both parties will be engaged in litigation that could take years and lead to substantial legal costs and additional claims.

"In light of the protracted uncertainties, Moody's will also continue to monitor the liquidity and financial flexibility exhibited by the Atlantia group, the continued ability to access new funding, as well as measures aimed at preserving cash to mitigate the financial impact of the bridge collapse," Moody's said.

Moody's also withdrew Autostrade's long-term issuer rating, which was previously Baa3.