OREANDA-NEWS. Fitch Ratings has affirmed Caisse Nationale des Autoroutes' (CNA) Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'AA' with a Stable Outlook, and its Short-term foreign currency IDR at 'F1+'. CNA's long-term senior unsecured bonds have been affirmed at 'AA'.

KEY RATING DRIVERS
Under its rating of public-sector entities criteria, Fitch classifies CNA as a credit-linked entity of the state of France (AA/Stable/F1+), and equalises CNA's ratings with those of the sovereign. In Fitch's view, CNA's status as an administrative public agency (EPA) reflects the ultimate responsibility of the French state for CNA's solvency and liquidity, alongside the sovereign's close monitoring and control of the entity.

As an EPA, CNA cannot be liquidated or go bankrupt, and is allowed to access state emergency financial support mechanisms such as emergency loans or the purchase of CNA bonds by the Ministry of Finance. Fitch estimates that these mechanisms will be deployed in a timely manner in case of need. CNA has no equity and its liabilities are modest compared with the state's funding capacity. Also, according to the covenants between CNA and the motorway concessions companies (MCCs), MCCs loans from CNA become immediately and fully due and payable if their net debt exceeds 7x their EBITDA and if their EBITDA does not cover at least 2.2x their financial charges.

The French state exercises direct control over CNA through its board (seven out of eight board members are civil servants) and an ongoing audit is carried out by the two sponsors, The Ministry of Finance and The Ministry of Transport. As an EPA, CNA is subject to public law, follows public accounting rules and is subject to the ultimate control of the National audit court. CNA's day-to-day administration and financial management is sub-contracted to Caisse des Depots et Consignations (CDC, AA/Stable/F1+).

CNA mainly acts as a debt-amortising structure. It was created to provide pooled funding for state-owned MCCs. As most of the MCCs were privatised from 2001 and 2006, they can no longer access CNA for funding. CNA is now in charge of matching loan reimbursements from these private MCCs with its own debt repayment schedule until all debt stock is redeemed. However, CNA still provides funding to two state-owned tunnel operators. CNA's debt decreased to EUR5.9bn at end-2015 from EUR7.5bn at end-2014, and is expected to fall to around EUR1.1bn at end-2018. Most of the privatised MCCs' loans will mature in the coming three years, leaving the loans taken by the two public tunnel operators as CNA's only debt by end-2018.

MCCs benefit from a diversified user base and a predictable regulatory framework. Their revenues grew 3.9% in 2014, supported by 2% traffic growth. Their debt remained fairly stable since 2011, and MCCs have been compliant with CNA's financial covenants.

RATING SENSITIVITIES
Changes to the French sovereign's ratings will be mirrored in CNA's ratings. An unfavourable change in CNA's legal framework could also lead to negative rating action.