OREANDA-NEWS. Fitch Ratings has affirmed Italian Azienda Sviluppo Ambiente e Mobilita's (ASAM) Long-term foreign and local currency Issuer Default Ratings (IDR) at 'BBB' and Short-term foreign currency IDR at 'F3'. The agency has removed all ratings from Rating Watch Negative (RWN) and assigned Stable Outlooks to the Long-term IDRs.

KEY RATING DRIVERS

Fitch's rating action reflects our opinion that its sponsors, Finlombarda and its ultimate owner, the Region of Lombardy, exercise extensive control over the subsidiary ASAM, which translates into adequate financial support over upcoming cash calls from its debt maturity schedule (EUR24m for 2015-2016, according to Fitch's calculations). It follows the conclusion of the review initiated on 17 October 2014 (see 'Fitch Places ASAM on Rating Watch Negative' at www.fitchratings.com).

At end-2014, Finlombarda used funds provided by the region to grant ASAM a EUR29m intercompany loan. The loan was used for the eventual repayment of an outstanding bank loan and also to smooth negotiations under a second EUR100m bank loan.

Fitch believes that ASAM is of strategic importance to Finlombarda, in view of its main asset represented by toll road operator Milano Serravalle (MSMT: BB+/RWN), a key motorway in the Milan-Lombardy area. Fitch uses a top-down rating approach to rate ASAM under its criteria "Rating of Public Sector Entities - Outside the United States".

According to preliminary 2014 figures, Fitch expects ASAM to have posted its fourth consecutive net loss as a result of a lack of dividends from MSMT. Hence, Fitch envisages no dividend distribution from MSMT for 2014-2015, extending the trend of the previous two years and leaving ASAM's debt servicing contingent on the sponsors' support.

RATING SENSITIVITIES

A positive rating action may result from ASAM's sponsors providing a more formalised support to all ASAM's financial liabilities.

Conversely, ASAM could be downgraded should its strategic importance for the sponsors diminish, leading to a weakening of their commitment to support ASAM financially.