OREANDA-NEWS. September 28, 2015. Fitch Ratings has placed THPA Finance Limited's (THPA) notes on Rating Watch Negative (RWN) as follows:

GBP110.7m class A2 secured 7.127% fixed-rate notes due 2024: 'A-'; placed on RWN
GBP70m class B secured 8.241% fixed-rate notes due 2028: 'BB+'; placed on RWN
GBP30m class C secured floating-rate notes due 2031: 'BB-'; placed on RWN

THPA is a securitisation of the assets held, and earnings generated, by the PD Ports group, which owns the port of Tees & Hartlepool on the northeast coast of England.

KEY RATING DRIVERS
The rating action follows Sahaviriya Steel Industries' (SSI) recent announcement that it will pause production of its iron and steelmaking operations at its plant at Teesside in northeast England. Fitch notes that the plant's blast furnace remains lit for the time being so that production could be brought back online quickly. This comes after SSI disclosed financial difficulties partly a result of materially falling steel prices and high indebtedness.

Revenues from the contract with SSI UK materially contribute to the revenues of PD Ports. Consequently, a permanent loss of such revenues generated by the SSI contract (which also benefits from a minimum volume guarantee), for example, if the steel plant is mothballed, is likely to have a material impact on PD Ports' EBITDA. PD Ports' management is currently assessing the potential impact on the issuer's cash flows.

RATING SENSITIVITIES
Fitch will aim to resolve the RWN on all notes once more certainty emerges about the plant's future or its impact on PD Ports' activities. If the steel plant is permanently closed, and assuming all else remains equal, the most likely outcome for the class A2, class B and class C notes would be a downgrade by one to two notches, respectively. Further developments, including the potential impact on the port's operations, will be closely monitored.