Moody's drops Inversiones Alsacia to Caa2

Moody's Investors Service said it downgraded the senior secured rating of Inversiones Alsacia SA to Caa2 from B2.

The rating remains on review for possible downgrade.

Moody's said the downgrade reflects the project's greater likelihood of default in the near to medium term as evidenced by the project's: (a) Breach of covenants pertaining to minimum debt service coverage ratios and maintenance of required balances in O&M and Overhaul Accounts, which could trigger early amortization or an event of default; (b) underfunded debt service reserve account which is expected to be depleted on the next coupon payment due February 2014, increasingly exposing the transaction to a default; (c) increasing dependence on compensation for concession amendments and for lower passenger demand to meet debt service payments; and (d) extremely tight expected cash flows available for debt service payments going forward.

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