New York, September 11, 2018 — Moody’s Investors Service (“Moody’s”) affirmed the A3 ratings assigned to the senior secured notes issued by Interoceanica IV Finance Limited, Peru Enhanced Pass-Through Finance Limited and IIRSA Norte Finance Limited. The outlooks are stable.
RATING RATIONALE
Today’s rating action considers that the financing structures for the aforementioned transactions are performing as expected and remain closely linked to the credit quality of the Government of Peru (A3 stable). The transactions are backed by Certificados de Reconocimiento de Derechos del Pago Annual por Obras (“CRPAOs”) issued by the Government of Peru. The CRPAOs are unconditional, irrevocable, fixed, US dollar denominated obligations of the Government of Peru. Once issued, the right of the CRPAO holder to collect the GOP payment is not subject to the company’s performance levels or by any other circumstances including destruction of the works performed, change of control of the company, or breach or termination of the Concession Agreement.
Given that the construction related to the CRPAOs that are pledged to the payment of the Notes on the three transactions is complete, all of the related CRPAOs have been purchased. Thus, the payment of debt service on the senior secured notes depends entirely on the payment of the CRPAOs by the Ministry of Transportation and Communication (“MTC”) of the Government of Peru. As such, the ratings and outlooks assigned to the transaction are closely linked to the rating and outlook of the Government of Peru.
The rating outlooks are stable reflecting the outlook on the Government of Peru’s rating.
WHAT COULD CHANGE THE RATING UP/DOWN
Given the structure of debt payments which rely on the Government of Peru’s ability and willingness to budget and appropriate CRPAO payment obligations annually, the rating of the project is closely tied to the sovereign rating of Peru. Conversely, A failure of the Government of Peru to honor any annual payments or concession termination without adequate compensation could have negative implications on the rating. Any changes in the rating of the Government of Peru would likely impact the rating of the debt obligations.
Given that the Notes’ structures de-link the transaction with the underlying assets’ volume and tariff risk (toll roads), and the exposure to the Government of Peru, the methodology used for these ratings is the Generic Project Finance methodology.
Atlantic Investors Service 