Ferrovial S.A.

The company has also reiterated its intention to keep the nonrecourse nature of the debt within the group's project-financed subsidiaries without cross-default clauses. This confirms our approach in assessing the company's adjusted credit ratios by focusing on the group's core construction division, as well as on dividends received from investments. We will therefore continue deconsolidating assets and liabilities from self-funded infrastructure projects in which the company is invested. The stable outlook reflects our view that Ferrovial will maintain adjusted FFO to debt of at least 45% over the next 18-24 months. In our view, there is significant headroom under this threshold for the current rating, although we anticipate this could be eroded due to increased investment in the form of

...Ferrovial maintained high production in its construction division, despite the pandemic. Over the first nine months of 2020, revenues in the construction division increased by 14.2% on a like-for-like basis. This high level of production was supported by projects in the U.S. but received a hit of about 240 million due to the outbreak of COVID-19, given the stoppages and the slowdown of works, widely distributed throughout all geographies. Budimex and Webber have also reported strong earnings driven by profitability improvements. However, Ferrovial construction (formerly Agroman) reported negative earnings due to internal fees of onerous contracts as well as pandemic-related costs. Infrastructure assets will be directly hit by the COVID-19 pandemic, leading to lower dividends. Following travel restrictions and lockdowns, traffic has plummeted at Heathrow, triggering a dividend lock-up. We also do not expect AGS airports (Aberdeen, Glasgow, Southampton) to pay any dividends this year. Ferrovial...

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