RIO DE JANEIRO, Brazil - (Business Wire) Fitch Ratings expects continued market growth in Brazil's toll road sector, along with strong competition for new auctions, new players entering the market and potentially reduced profitability for new projects, according to a Fitch special report released today, entitled 'Brazil's Toll Roads Concessions: A New Cycle of Opportunities in a More Stable Economic Environment'.
'The expected expansion in the Brazilian economy suggests more significant growth in vehicle traffic, which should attract new players to market and improve the credit profile of the companies that participated in the first phase of toll road concession programs,' according to Mauro Storino, Director in Fitch Latin America Corporates Group.
In Fitch's view, sector growth is based on four key points:
--Reduced risks due to stable regulatory rules and increasing credibility of the legal framework governing concession contracts;
--Forecasted expansion in the Brazilian economy;
--Availability of credit providing maturities more suitable for long-lived toll road assets;
--Support from the federal and state level governments for expansion and rehabilitation of the road network through the concession program.
These factors are likely to enable projects in Brazil to attract international operators and investors, while allowing existing participants to consolidate their position and generate cost efficiencies.
Fitch expects that greater competition in the sector may result in significantly lower profitability rates for the new concessions, compared with projects auctioned in the past. Reduced profitability could pressure their cash flow and increase risk, resulting in lower ratings for recent concessions, compared to mature concessions. Nevertheless, Fitch believes that development in the sector should be sustainable over the medium and long terms.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings
Gisele Paolino, 21 4503-2624 (Rio de Janeiro)
Mauro Storino, 21 4503-2625 (Rio de Janeiro)
Ricardo Carvalho, 21 4503-2627 (Rio de Janeiro)
Michael McDermott, 212-908-0605 (New York)
Alberto Santos, 212-908-0714 (New York)
Christopher Kimble, 212-908-0226
(Media Relations, New York)
