On 14 November 2014, Moody’s raised its rating of BCR, the holder of the main concession operated by Brisa, from Ba1 positive outlook to Baa3 with a stable outlook. Baa3 is an investment grade rating and reflects the strong underlying performance of the business over the last 12 months. This is a significant event for the Fund’s investment in Brisa as BCR now has 2 investment grade ratings. Fitch has had a BBB rating with a negative outlook for BCR since December 2011. In comparison, the Republic of Portugal is currently rated Ba1 stable outlook and BB+ stable outlook by Moody’s and Fitch, respectively. These are both sub investment grade ratings.
The rating upgrade is the result of 2 main factors. Firstly, the improved economic performance of Portugal, in particular the growth in domestic consumption, has resulted in traffic increasing by 5.1% in the first 9 months of
2014 compared to the equivalent period in 2013 (and which also follows an increase in the 4th quarter of 2013
compared to 2012). BCR is the best performer among Moody’s European toll road operators in the year to date. Traffic levels further benefitted from increased leisure traffic over the summer period. Secondly, the strong traffic trends coupled with continued operational efficiencies have resulted in BCR reporting strong operating and cash flow metrics, with a commensurate significant reduction in BCR’s leverage. Moody’s also highlights BCR’s strong liquidity position and management of upcoming debt maturities. The investment grade rating is a
positive development that reflects Brisa’s strength and improved performance.
This information note (“Note”) has been prepared by Arcus European Investment Manager LLP (“Arcus”) for use solely for information purposes. Arcus makes no representations or warranties to the accuracy or completeness of any past, simulated or estimated performance results contain herein, and further nothing contained herein shall be relied upon as a promise by, or representation by, Arcus whether as to past or future performance results.