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10 Years in Infrastructure

Toll Roads, Airports, Power & Renewables

The Fitch Ratings series 10 Years in Infrastructure features three new special reports (no subscription required):

•  Toll Roads – 10 Years in Infrastructure

•  A Decade in Airport Ratings

•  10 Years in Power and Renewables - A Decade of Phenomenal Growth in Renewables

Evolving Travel Behavior Critical for Toll Roads in Next Decade

Numerous advances in the way people travel will be integral in how much revenue toll roads throughout the world are able to produce over the next 10 years, according to Fitch Ratings in a new report.

Some Russian Local Governments Might Lose on World Cup

Some Russian regions are not financially capable of maintaining their 2018 FIFA World Cup facilities in the long run and this could become a credit risk, Fitch Ratings says. However, infrastructure, especially roads and airports, constructed for the World Cup should improve economic growth potential and a rise in tourism will result in small revenue increases in the short term for local and regional governments.

Teleconference Replay

Trends in Global Power Sales Contracts

Fitch Ratings discussed its recently published research piece entitled, "Trends in Global Power Sales Contracts (Expanding Options in Risk Management).”

US Autos, Highway Trust Windfall Unlikely If CAFE Changes

A potential rollback of Corporate Average Fuel Economy (CAFE) standards may provide some relief to the US auto industry and raise Highway Trust Fund (HTF) revenue. However, a financial windfall for the auto industry should not be expected, due to uncertainty around the California state-level waiver, long production lead times, and the effect fuel prices and overall economic conditions have on ongoing fuel usage.

Third Runway Creates Long-Term Uncertainty for Heathrow

There is uncertainty over whether the regulator will allow the airport to generate, through tariffs, additional cash flows to build up metrics consistent with the higher ratings on top of full recovery of costs associated with the project.

China's New Renewables Policy to Hit Solar Manufacturers

China's decision to replace the feed-in-tariff (FiT) mechanism with a bidding process for most new wind and solar power projects will lower tariffs and reduce the incentive for operators to increase capacity. The strongest impact will fall on producers of solar panel equipment, with solar capacity additions likely to decline sharply. 

Corporate Power Purchase Agreements May Introduce Risk to Energy Projects

"Fitch's analytical framework for project finance extends beyond traditional PPAs and can be applied to new structures that are becoming more commonplace like synthetic PPAs, fixed volume price swaps and proxy revenue swaps," said Director Chris Joassin. 

Fitch Rates LINXS APM Project

Fitch Ratings hosted a call with investors to discuss its recent ‘BBB+ (EXP)’ of the California Municipal Finance Authority's approximately $1.2 billion senior lien revenue bonds. The proceeds of which will be used by the borrower (LAX Integrated Express Solutions, LLC (LINXS)) to construct an automated people mover at Los Angeles International Airport.

Energy Storage Solutions to Advance Renewable Generation

We do not expect the building requirement to have a material effect on public power issuer ratings. The requirements are consistent with the ongoing trend toward greater energy efficiency and reduced per capita electricity consumption in the state. Public power utilities have been planning for, and adapting their long-term supply strategies to, responding to this trend.

US Gas Price Rise Will Not Lower Toll Revenue

The recent increase in gas prices is unlikely to have a negative impact on US highway toll revenue. We expect moderate traffic growth in 2018, based on sustained economic and population growth, and moderate increases in gas prices. However, if gas prices do rise significantly, and over a sustained period of time, toll roads we rate could be affected.

Smaller Airports More Affected by Airline Failure

Secondary hubs and airports in small markets are more affected by an airline failure than their major counterparts. This is just one of the disparate effects airline failures have on airports around the world.

Light Rail Revival Brings Greater Complexity to PPPs

Renewed global interest in trams and other types of light rail, and extensive use of public-private partnership (PPP) structures to finance their development highlight unique or exacerbated risks of those transactions compared to typical PPPs.

The Infrastructure Footrace: Why is Europe Stuck in Neutral?

As Europe now begins to recover from the decade old effects of the global financial crisis, investment in new and updated infrastructure has been shrinking.

Risk-Sharing Imperative for Light Rail Projects

Traffic congestion, lack of parking and numerous other factors are making what was considered by some to be an outmoded form of transportation desirable again for investors.

Guide to Investing

Fitch Ratings' guide to investing in Infrastructure and Project Finance

Wenger Departure Creates Some Uncertainty; Franchise Strength Drives Stable Outlook

The departure of Arsene Wenger as manager of Arsenal Football club will be slightly credit negative in the short term, as it may lead to financial performance volatility while the club finds a suitable replacement. However, it should be neutral to positive in the long term. 

Chinese Offshore Wind Growth Reflects Improved Returns

Growth in Chinese offshore wind power capacity has accelerated in recent years, reflecting lower costs and a relative improvement in tariffs compared with onshore wind power. The government's target of increasing offshore wind capacity to 5 gigawatts by 2020 is likely to be achieved at the rate of construction.

Fitch Assigns Port of Melbourne's Lonsdale Finance First-Time 'BBB'; Stable Outlook

 Fitch Ratings has assigned Lonsdale Finance Pty Ltd a First-Time Long Term Issuer Default Rating (IDR) of 'BBB'. The Outlook is Stable.

Lonsdale Finance is the issuing entity for the Port of Melbourne. The rating reflects Port of Melbourne's role as a primary port of call serving the Victorian and broader Australian market, with a diversified landlord port business model benefiting from a stable regulatory regime and portfolio of long-term property leases governing operations of its well-established port facilities. The company's debt structure is senior, but the lack of strong covenants, non-amortising profile, high gearing and considerable refinancing risk constrain its rating.

Charging Infrastructure is Needed for Wider EV Adoption

Successful, widespread use of EVs requires material investments in comprehensive EV charging infrastructure. While there has been some progress, with a growing number of charging points across Europe, a dense and convenient charging infrastructure is still lacking and might become a hindrance for further advances in EV adoption. 

Contractor Squeeze Will Add to US Infrastructure Woes

The lack of planning and funding for some state transportation projects has begun to raise credit pressures on contractors handling large projects. We expect this dynamic to continue as state revenue growth has slowed and federal funding seems unlikely.

Chicago O'Hare Airport Inks New Airline Agreement

The City of Chicago and the leading carriers serving O'Hare International Airport will begin to operate under a new airline use and lease agreement (AUL) starting in May 2018, which Fitch Ratings views as an essential step to allow the airport to address both the modernization and the expansion of the airport.

More New Managed Lanes Popping up in the US

"The longest operating facility, SR-91 in California, has seen an immediate and sizeable boost to Orange County Transportation Authority's revenues from the Riverside County Transportation Commission's express lanes extension, which led Fitch to revise its Rating Outlook on the project to Positive from Stable," said Director Tanya Langman. 

US Transportation Growth Steady as Focus Turns to Interest Rates, Trade

Recent trade friction between the United States and China and the prospects for higher interest rates are not likely to affect growth for the major transportation segments for the foreseeable future.

Florida Underscores State Commitment to Toll Projects

A bill which would have authorized the FDOT to acquire Garcon Point Bridge (the bridge) did not pass the Florida senate. The bill would have provided the FDOT with the authorization to purchase the bridge, repay itself for operations and maintenance and capital costs previously expended and to purchase the authority's $135 million in defaulted bonds at a discounted price. 

Stricter Safety Standards May Affect Indonesian Contractors

Indonesia's government is likely to adopt stricter safety and construction quality standards for infrastructure projects, after several accidents prompted a moratorium that temporarily stopped the construction on a number of projects to conduct inspections.

2018 Milken Institute MENA Summit

One Belt One Road - Exporting China's Domestic Development Story​

James​​ McCormack, Global Head of Sovereign and Supranational ratings, joins thought leaders in Abu Dhabi to assess China's One Belt One Road Initiative, as a part of Fitch Ratings' sponsorship of the Milken Institute inaugural MENA Summit.

US Managed Lanes Finding More Favor with Commuters

Traffic continues to grow for US managed lanes with low fuel prices driving corridor demand and congestion higher. Construction of new managed lanes is also surfacing in Virginia, Texas, California and Colorado among other states. As the sector rapidly develops, system expansions and managed lanes networks are being contemplated in regions with high congestion levels.

Tax Reform Decision On PABs a Plus for US Toll Roads

Tax reform passed last year retained the tax-exempt status for private activity bonds (PABs), which according to Director Tanya Langman, remains critical for greenfield projects along with the Transportation Infrastructure Finance and Innovation Act.

Ratings Differentiation: EMEA vs. US Airports

Differences in ownership, price risk and debt structure drive higher US ratings.

US Infrastructure Plan Could Provide Boost for US Airports

The Trump administration's plan for US infrastructure unveiled last week could provide regulatory easing and a fresh infusion of financing options across US airports, according to Fitch Ratings. However, acceleration to full airport privatization within the sector is unlikely.

Why forum

The Infrastructure Footrace: Why is the US Stuck in Reverse?

There has been much discussion over the “crumbling infrastructure” in the US, the risk to the economy and the time and money needed to update and strengthen it. But the US is very much stuck in reverse as it pertains to its infrastructure and where it is headed. Why? There are five reasons.

US Infra Plan May Enhance Near Term Project Viability

The Trump administration's infrastructure proposal would significantly expand private activity bond (PAB) usage and speed the approval process. Both developments would be credit positive for infrastructure projects. However, the proposal's effects on overall infrastructure development will be small as the proposal lags the need in the US by trillions of dollars.

What to Watch in 2018

Outlook Compendium for Global Oil and Gas

Volume Growth Steady for US Ports as NAFTA Decision Looms

US ports are positioned for another solid year of growth, though the Trump administration's evolving stance on both domestic and international trade is a long-term development worth a close watch.

Passenger Traffic Up 15% from Peak Levels for US Airports

Enplanements grew an estimated 3.3% in 2017, with Fitch projecting much of the same for 2018 (2.5% to 3%). That said, Fitch's optimism over traffic growth is more guarded than industry forecasts. 

What to Watch in 2018

Outlook compendium for Global Infrastructure

What to Watch in 2018

Outlook compendium for Global Aviation

eSports Popularity Growth Will Benefit Video Game Sector

The major video game publishers are dedicating resources to develop eSports strategies around key franchises. The differing approaches range from focusing on the top tier of professional competition to attract major media contracts, to facilitating smaller, localized tournaments to help grow overall player engagement. 

No Immediate Rating Impact on AES Puerto Rico LP from PREPA Privatization

We do not anticipate an immediate rating impact for the AES PR (C/Negative Watch) securities issued through the Puerto Rico Industrial, Tourist, Educational, Medical & Environmental Control Facilities Financing Authority following announcement of plans to privatize the Puerto Electric Power Authority (PREPA) on Jan. 22, 2018.

What to Watch in 2018

Outlook compendium for EMEA Power and Gas 

Carillion Highlights Key Construction Sector Risks

The collapse of UK construction company Carillion highlights the importance of contract risk management and of maintaining margins for companies in the European engineering and construction (E&C) sector. The sector is largely sub-investment grade, but investment-grade ratings are possible where both the business and balance sheet are prudently managed. 

2018 Transportation Outlook Teleconference

Fitch hosted a teleconferences on our 2018 transportation outlook. Listen to the replay

2018 outlook

Tax Reform Clouds 2018 Stable Outlook for US Transportation

Potential changes in tax, trade and border policies could affect growth for some transportation segments. The Trump administration's tax reform proposal is a mixed bag. More Global 2018 Credit Outlooks

2018 outlook

Tax Reform Could Stunt US Renewables Growth in 2018

Senior Director Gregory Remec: "Separately, the Trump administration's possible import tariff on solar photovoltaic panels is likely to stall the development of new renewable energy projects and may significantly reduce the growth rate of renewable generation capacity." More Global 2018 Credit Outlooks

Fitch Tools

FACT Shows Large Hubs Again Driving Traffic for US Airports

Annual passenger traffic at US airports grew at an even greater rate in 2016 while airport debt remained relatively flat.



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