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S&P downgrades Atlantia, units over increased concession termination risk

S&P Global Ratings downgraded Atlantia SpA and subsidiaries after the Italian government overhauled toll road operators' regulatory framework at the end of 2019, making changes to the process for terminating or revoking concession contracts.

The rating agency lowered its long- and short-term ratings on Atlantia and Autostrade per l'Italia SpA, or ASPI, to BB-/B from BBB-/A-3. It also lowered its ratings on Atlantia's Spanish unit, Abertis Infraestructuras SA, and Abertis unit Holding d'Infrastructures de Transport to BBB-/A-3 from BBB/A-2. Abertis unit Sanef's long-term rating was cut to BBB- from BBB.

Moody's placed the ratings of Abertis and its units on CreditWatch negative.

At the same time, S&P Global Ratings lowered the long- and short-term ratings of Aeroporti di Roma SpA to BB+/B from BBB/A-2, and placed them on CreditWatch negative.

The new framework limits the compensation that the Italian government will have to pay if it revokes a concession agreement with motorway operators early due to their failure to meet contractual obligations, which, S&P Global Ratings said, increases liquidity risks for ASPI and Atlantia and the concession termination risk for ASPI.

Atlantia appointed Carlo Bertazzo as CEO after Giovanni Castellucci resigned as CEO and general manager in September 2019 in the wake of a deadly bridge collapse in Genoa in 2018. Earlier in January, Italy's foreign affairs minister signaled that concessions granted to ASPI may soon be revoked.

Under the new law, ASPI's compensation may amount to €11 billion to €12 billion, without factoring in potential penalties payable by the company, compared to €20 billion to €25 billion in the net present value of future cash flows.

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