Beruflich Dokumente
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Toll Roads
Mexico
Mexican Toll Roads: The Impact of
Special Report the 2009 Crisis
Analysts Summary
Astra Castillo Trevizo • A few months into 2010, it is now possible to assess with greater clarity the impact
+52 81 8399-9100 the global economic crisis has had on the Mexican economy. A health alert early in
astra.castillo@fitchratings.com
the year, combined with social and political issues later on, affected a large portion
Maricela Flores Villarreal of the country’s economic activity in 2009.
+52 81 8399-9100
maricela.flores@fitchratings.com • After 13 years of continued growth, toll roads exhibited a significant reversal in
their performance last year, with traffic volume and toll revenues recording
Alberto José Santos substantial declines.
+1 212 908-0714
alberto.santos@fitchratings.com • More importantly, plummeting revenues degraded the payment ability of
securitizations backed by toll flows. Furthermore, the implementation of two new
Related Research taxes (IDE and IETU) in 2008 put additional pressure on results, leading, in some
• Latin American Infrastructure & cases, to a significant increase in tax payments relative to previous years.
Project Finance 2010 Outlook,
March 2, 2010 • Nonetheless, thanks to the lessons learned from the 1995 crisis, toll road
• Global Infrastructure & Project securitizations in Mexico now have mechanisms in place that aid the liquidity of
Finance 2010 Outlook, these structures. As a result, in 2009, Fitch Ratings affirmed the ratings of 13 of the
March 1, 2010 16 toll road securitizations currently rated by the agency.
• Rating Criteria for Infrastructure
and Project Finance, Sept. 29, 2009 • The objectives of this report are as follows:
• Latin America Toll Roads: Global
Credit Crisis Causes Bumpy Road o To list the key factors affecting toll road performance.
Ahead, June 17, 2009
• U.S. Toll Roads and the 2007−2008
o To describe the pre-crisis performance of the 24 toll road segments monitored
Recession: A Diagnosis of by Fitch.
Performance, June 11, 2009
o To explain the impact the recent crisis had on toll road assets and the
structures backed by their flows.
Balancea
Toll Road Issuance (Ticker) Maturity ($) Rating Outlook
Armería ⎯ Manzanillo ARMEC 03U May-15 564 AAA(mex) Stable
Ecatepec ⎯ Pirámides ⎯ ⎯ ⎯ ⎯ ⎯
Puebla ⎯ Atlixco ATLIXCB 04U Aug-19 500 AAA(mex) Stable
Sueco ⎯ Villa Ahumada CHIHCB 02U / 02-2U Nov-12 1,593 AAA(mex) Stable
Delicias ⎯ Conchos CHIHCB 09 Aug-22 5,500 AA+(mex) Stable
Conchos ⎯ Camargo ⎯ ⎯ ⎯ ⎯ ⎯
Camargo ⎯ Jiménez ⎯ ⎯ ⎯ ⎯ ⎯
Chihuahua ⎯ Sacramento ⎯ ⎯ ⎯ ⎯ ⎯
Santa Isabel ⎯ Cuauhtémoc ⎯ ⎯ ⎯ ⎯ ⎯
Ojo Laguna ⎯ Flores Magón ⎯ ⎯ ⎯ ⎯ ⎯
Flores Magón ⎯ Galeana ⎯ ⎯ ⎯ ⎯ ⎯⎯
Jiménez ⎯ Savalza ⎯ ⎯ ⎯ ⎯
Atlixco ⎯ Jantetelco CONCECB 06U Sep-26 502 AA+(mex) Stable
Peñón ⎯ Texcoco CPACCB 04 Dec-21 1,773 AA(mex) Stable
Libramiento Fresnillo FREZAC 05 Mar-20 1,316 AA+(mex) Stable
Libramiento Noreste de Zacatecas ⎯ ⎯ ⎯ ⎯ ⎯
Libramiento Calera ⎯ Enrique Estrada ⎯ ⎯ ⎯ ⎯ ⎯
Kantunil ⎯ Cancún MAYAB 02-AU Feb-19 1,381 AA(mex) Stable
MAYAB 02-BU Dec-20 267 A(mex) Stable
Toluca ⎯ Atlacomulco OCALFA 95U May-26 656 A+(mex) Stable
Libramiento Plan del Río PLANRIO 05U Mar-20 306 AA(mex) Stable
PLANRIO 05-2U Mar-30 234 A(mex) Stable
Tenango ⎯ Ixtapan de la Sal TENANCB 05U Oct-22 809 AA−(mex) Stable
Túnel de Acapulco TUCACCB 08 Dec-33 1,250 AA−(mex) Negative
Cardel ⎯ Veracruz VCZ 03U Nov-14 482 AAA(mex) Stable
El Altar ⎯ Santa Ana ZONALCB 06U Dec-31 1,838 B−(mex) Negative
Source: Comisión Nacional Bancaria y de Valores.
On a monthly basis, the agency tracks the performance of both traffic and revenue
generation for each of the road segments. In addition, Fitch monitors the debt
issuances backed by the flow of these segments on a semi-annual basis, verifying that
the respective trust maintains adequate levels of liquidity and coverage in order to
detect any event that may potentially affect the solvency of the rated debt structures.
Fitch thoroughly reviews each structure annually, analyzing the recent performance of
each asset and liability and running in depth projections of expected performance
throughout the maturity of the debt instrument. The structures may be reviewed more
frequently if a particular event or an extraordinary situation calls for an update.
2 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
Global Infrastructure & Project Finance
• Geographic location.
• Years of operation.
• Advantages relative to the competing free road.
• Reasons for usage.
Geographic Location
Not surprisingly, those toll roads located in the more dynamic areas have the busiest
traffic patterns and highest revenues. Another important factor is the existence of other
projects in close proximity to the toll road that may significantly alter the traffic pattern
within the region. One example is the Libramiento Calera–Enrique Estrada road in
Zacatecas (securitized in FREZAC 05), which saw an increase in traffic of over 20% in 2008
as a result of the construction of a bridge in a neighboring area. The map below
illustrates the location of the 24 road segments backing the structures rated by Fitch.
Years of Operation
Toll roads are characterized by a life cycle that comprises three distinct phases:
i) ramp-up, ii) growth, and iii) maturity.
The ramp-up phase encompasses the first two to four years of operation and is
characterized by a rapid increase in traffic. However, sometimes growth rates
registered during this period may not be proportionate to revenue growth, as toll roads
tend to offer a reduced “introductory” rate during this phase to attract potential
customers.
After an initial period of fast expansion, toll roads enter a phase of more moderate
expansion (the “growth” phase). A slowdown in the growth rate is normal and,
therefore, does not necessarily reflect a deficient performance.
Finally, those roads that have been in operation for over a decade enter a more
“mature” phase, in which no significant changes in traffic patterns are expected unless
there is some kind of extraordinary event taking place in the area. Analytically, mature
toll roads have the advantage of a long performance history, which provides useful
information when formulating projections.
Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 3
Global Infrastructure & Project Finance
However, while “seasoning” effects are significant, the number of vehicles traveling on
a particular toll road is more related to the GDP of the area than to the age of the
asset. The table below shows the year in which each toll road initiated operations.
4 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
Global Infrastructure & Project Finance
Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 5
Global Infrastructure & Project Finance
economy, experiencing the fastest and steepest drops in usage. Conversely, these
roads tend to show the most rapid response to a recovery in economic activity.
(2.0)
(4.0)
(6.0)
(8.0) (6.4)
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
In 1995, toll road traffic grew by 2.7% despite the severe economic crisis experienced
that year. However, this was primarily attributable to the ramp-up of the Peñón-
Texcoco (CPACCB 04) road, which, due to its strong initial growth, represented 22% of
the total volume of all toll roads combined.
When excluding the new road, it becomes clear that the 1995 crisis had a significant
impact on toll road traffic, with total
traffic dropping by as much as 6% that
year. However, the recovery 2008 Traffic Growth Summary
materialized relatively quickly, as only a
a few months later, all 24 toll roads 2008 Growth Number of Roads
Above 10% 2
recorded a rebound in traffic. Between 5% and 10% 4
Between 0% and 5% 11
In 2008, the majority of the roads Negative 7
registered growth rates that were a
Refers to the growth rate of each individual toll road segment.
within expectations.
Roads with growth exceeding 10%: One of these was in its ramp-up phase, while the
other benefited significantly from the construction of a bridge near the road.
Roads with growth between 0% and 10%: The consistent, moderate growth rates of
these assets reflect their average age (of 16 years), as well as the economic stability
recorded in Mexico during that year.
Roads with negative growth: One of these (an urban road) was severely affected by
construction performed on a connecting road, while another suffered from a variety of
factors that prevented it from capturing the minimum amount of traffic anticipated
prior to its ramp-up.
The five remaining roads, which are located in Chihuahua and used for commercial
purposes, exhibited positive growth until the third quarter of 2008. During the fourth
quarter of the year, however, they started to record a continued decline in traffic as a
6 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
Global Infrastructure & Project Finance
result of the global economic and financial crisis. The fact that these toll roads were
the first to show a decline in volume provides evidence that the crisis entered the
country from its northern border.
Revenues
While it would be logical to believe that changes in traffic volume are similar or
proportional to changes in revenues, this has not always been the case, as total
revenues not only depend on traffic patterns, but also on the specific situation faced by
each road, including:
• Discounts for different types of vehicles (e.g., discounts for cargo vehicles as an
incentive to travel via a particular toll road).
• Preferential tariffs for certain types of vehicles (e.g., special tariffs for residents of
the area).
• Weekend tariffs.
• Changes in traffic composition.
• Extraordinary increases in tariffs that have been previously approved by the
governing authorities.
• Lagging tariffs, given that toll adjustments are not always completely in line with
inflation.
When confronted with any of these situations, toll roads that are experiencing growth
in traffic frequently record a decline in revenues, or vice versa. (It should be noted that
revenue figures in this report are peso denominated, before value-added taxes, and
expressed in real terms as of Jan. 31, 2010.)
Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 7
Global Infrastructure & Project Finance
8 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
Global Infrastructure & Project Finance
Ramp-Up
(2.0) (3.6)
(4.0)
(6.0)
(8.0) (6.4)
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
The table below shows the monthly change in the annual average daily traffic (AADT) in
2007, 2008, and 2009. This AADT is cumulative, which means that it shows the traffic
recorded during all of the months up to a certain date in order to provide a perspective
of the trend for the entire year and not for a single month. For example, the AADT
accumulated until March comprises the total traffic registered during the first three
months of the year and is compared with the same period of the previous year.
It is evident that the months most affected by the crisis (in terms of volume) were May,
June, and July. During the second half of 2009, traffic volume continued to decline,
though at a slower pace; and towards the end of the year, the first signs of recovery
became apparent.
Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 9
Global Infrastructure & Project Finance
260,000
255,000
250,000
245,000
240,000
235,000
230,000
11 8
12 8
8
11 9
12 9
9
08
08
08
08
08
08
08
08
10 8
09
09
09
09
09
09
09
09
10 9
0
/0
/0
/0
0
/0
/0
/0
1/
2/
3/
4/
5/
6/
7/
8/
9/
1/
2/
3/
4/
5/
6/
7/
8/
9/
The severity of the crisis can be illustrated by the fact that in 2008, 17 out of 24 toll
roads recorded positive growth (average of 4.6%), whereas in 2009, only three of the
followed assets saw an increase in volume (average of 1.9%).
As implied previously, commercial and tourist roads were the most affected by the
crisis, with urban roads showing less severe declines in traffic.
While commercial and tourist road segments exhibited declines of 5.3% and 7.5%,
respectively, total traffic fell by only 3.6%, as urban roads represent a relatively larger
proportion of the total.
Although commercial roads are by far
the most extensive in terms of 2009 Mix
Miles AADT Weight (%)
mileage, in 2009, 68.1% of total
Urban 184.9 165,597 68.1
traffic stemmed from urban roads, as Commercial 361.4 49,363 20.3
these tend to get the most usage. Tourist 176.7 28,207 11.6
Total 723.0 243,167 100.0
10 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
Global Infrastructure & Project Finance
Revenues
While in nominal terms total revenues of the 24 monitored toll roads increased by 0.8%
in 2009, in real terms total revenues dropped by 4.3% last year.
The difference in traffic (–3.6%) and real revenue (–4.3%) changes can be attributed to
a variety of factors, including:
• A shift in traffic composition observed for toll roads that saw a drop in commercial
vehicles as a result of the economic downturn. Commercial vehicles pay the highest
fees, with double-axle trucks paying approximately twice as much as automobiles,
and trucks with more than seven axles paying five times more, on average, than
automobiles.
• In 2009, some tranches did not adjust their tariffs 100% by inflation as authorized
by the concession granted.
(20.0) (4.2)
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
In terms of revenues, commercial and tourist road segments were again the most
vulnerable to the economic downturn.
Credit Risk
The payment ability of a structure is directly related to revenues as well as operating
and maintenance expenses, which have a first claim on revenues. Therefore, the flows
that are relevant to the structure are those that are available for debt service after
higher ranking obligations are satisfied.
Of the 16 structures rated by Fitch in 2009, six recorded a drop (in real terms) in their
cash available for debt service (CADS), with the decline ranging from –3% to –48%.
It should be noted that CADS can change not only due to fluctuations in revenues, but
Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 11
Global Infrastructure & Project Finance
also due to changes in expenses, particularly maintenance costs. In fact, the toll roads
that registered the largest contraction in CADS also recorded high maintenance costs
during that year.
Although the decline in CADS has been quite severe in some cases, as a result of the
experience of the past 20 years, current Mexican structures have various mechanisms in
place aimed at protecting the flows from various contingencies, safeguarding to some
extent the quality of the instruments.
The following are the most commonly used mechanisms:
Conclusions
After an extremely difficult year, there are still significant challenges that the Mexican
economy will have to face in 2010. For toll roads, the primary challenge will be
recapturing the traffic lost over the past few months while at the same time adjusting
tariffs to reflect inflation. In addition, toll road operators will have to contain operating
and maintenance expenses without neglecting the physical condition of their assets.
Even though the decline in volume was much less severe than in 1995, there is concern
regarding how long it will take toll roads to recapture lost traffic given the extent of
the current global downturn, leading Fitch to believe that a complete recovery is still
far away.
The strong correlation that exists between urban toll road performance and local
economic activity suggests that traffic growth for these assets will likely be in line with
the growth expected for the Mexican economy, or 4.0% in 2010 and 3.5% in 2011.
On the other hand, commercial toll road performance will likely be more influenced by
GDP growth in the U.S. Although the economy seems to have touched bottom last year,
any recovery that might be observed is still incipient and uncertain. Fitch expects U.S.
12 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
Global Infrastructure & Project Finance
GDP to increase by 2.4% in 2010 and by 2.7% in 2011, dampening potential traffic
volume growth on commercial roads.
Therefore, key questions for toll road performance remain: i) when and to what extent
will the recovery of the U.S. and Mexican economies be reflected in toll road
performance, and ii) how long will it take for operations to return to pre-crisis levels.
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Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 13