Metropolitano de Tenerife, S.A.

This report does not constitute a rating action. Overview Key strengths Key risks Very supportive regulatory framework, with a proven supportive stance from the company?s only shareholder, the Cabildo de Tenerife (CIT), the government of the island. Exposure to some volatility due to changing electricity costs. Strong recovery in ridership levels after the pandemic, partially due to free tickets financed by the central government and the CIT, which generate record profits.Very low funding cost, with all debt in a single bullet bond that was issued at very favorable rates, and for which the entity is constituting a sinking fund to avoid refinancing risk. Labor conflicts in recent months, making operations more complex.Possibility of moderating ridership if free tickets are phased

...We could lower our rating on Metrotenerife if we were to downgrade Spain. We could also lower our rating if we saw a material weakening of the creditworthiness of the Cabildo Insular de Tenerife (CIT), or if we expected a lower likelihood of support from CIT to Metrotenerife....

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