Research Update: Rutas de Lima S.A.C. Debt Rating Cut To 'B' From 'BB' On Weaker-Than-Expected Operating Performance, Outlook Negative

We now expect Peru-based toll road operator, Rutas de Lima S.A.C. (RdL or the project), to have more volatile cash flow available for debt service (CFADS), mainly because of traffic performance in more unstable economic conditions. In addition, we believe that the regulatory risk has increased in light of the ongoing arbitration process due to the suspension of the installation of the toll plaza in Chillon that resulted in a loss of revenue at the project level since 2017. We also think the risk has grown due to the ongoing revision of the concession contract that could result in the modification of the existing conditions included in the current agreement. On Dec. 23, 2019, S&P Global Ratings lowered its issue-level

...- We now expect Peru-based toll road operator, Rutas de Lima S.A.C. (RdL or the project), to have more volatile cash flow available for debt service (CFADS), mainly because of traffic performance in more unstable economic conditions. - In addition, we believe that the regulatory risk has increased in light of the ongoing arbitration process due to the suspension of the installation of the toll plaza in Chillon that resulted in a loss of revenue at the project level since 2017. We also think the risk has grown due to the ongoing revision of the concession contract that could result in the modification of the existing conditions included in the current agreement. - On Dec. 23, 2019, S&P Global Ratings lowered its issue-level rating on RdL to 'B' from '##'. The outlook on the rating is negative. - The outlook reflects our view that we could further downgrade RdL in the next 12 months if the revision to the original contract includes new terms that could harm RdL's financial performance or...

Research Update