Moody’s rates HIT bond Baa3

Moody's Investors Service said it assigned a Baa3 rating to the €450 million bond due 2025 issued by Holding d'Infrastructures de Transport (HIT).

The outlook is stable.

HIT is the holding company of Sanef SA (Baa1, stable), one of the main French motorway concessionaires. As such, HIT's credit profile is driven by that of its operating subsidiary.

More specifically, HIT's rating reflects: (a) The low business risk associated with Sanef's toll-road operations, which comprise essential motorway links in France that are exposed to limited competition; (b) the strong fundamentals of Sanef's service area, which benefits from a diversified user base; and (c) a well-established and generally supportive concession framework in France.

However, Moody’s said the rating is constrained by the high leverage of the HIT group and Sanef's investment program, in light of a remaining concession life of 16 years. The consolidated credit quality of the HIT group is considered commensurate with a mid-Baa rating.

The Baa3 rating takes into account (a) structural subordination of current and future anticipated debt given bondholders' distance from Sanef's cash flows; (b) restrictions in Sanef's debt documentation, which place limits on its ability to upstream cash needed to service debt at HIT; and (c) refinancing risk associated with its bullet debt maturities over the medium-term, the agency said.

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