S&P Global cuts local ratings for three Mexican infrastructure projects

30 March 2020 - 12:00 am UTC

S&P Global downgraded the local scale ratings of three infrastructure projects in Mexico, following a previous cut to the sovereign’s rating, according to a 27 March press release.

The ratings agency cut to AA from AAA on a local scale the bonds behind two project financings; the bonds financing both the Libramiento de la Piedad road and the Río Verde-Ciudad Valles highway, and those financing the Coatzacoalcos-Villahermosa road. Additionally, S&P Global also cut the bonds’ behind the Federal Center for Social Readaptation (CFRS) in Oaxaca to AA from AA+.

S&P Global cited the decline in the sovereign’s credit quality, under pressure due to the impact of low oil prices and the economic shock caused by the coronavirus. Cash flow to both roads is associated to the Secretariat of Communications and Transportation (SCT), through contracts that include availability payments.

Meanwhile, the credit associated to the social infrastructure project in the state of Oaxaca depends on availability payments from the government agency for Prevention and Social Rehabilitation (PyRS).

The SPV Operadora de Infraestructura de Oaxaca is owned by Mexican construction company GIA, which won the 22-year contract in 2011.

The SPV behind the 134km Coatzacoalcos-Villahermosa road is owned by a consortium of companies led by Portuguese builder Mota Engil, which won the contract in 2016 to revamp and maintain the road.

The SPVs behind the Libramiento de la Piedad road and the Río Verde-Ciudad Valles projects are controlled by Mexican builder Empresas ICA that won the contract in 2007.

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