OREANDA-NEWS. Fitch Ratings has published an update of its 'Rating Criteria for Toll Roads, Bridges and Tunnels'. The updated report replaces the existing criteria (published Aug. 20, 2014) without modifying Fitch's analytical approach. No changes to the ratings of existing transactions are anticipated as a result of the application of the updated rating criteria.

The report describes the analytical framework used by Fitch analysts when evaluating debt issued by toll road operators and authorities across the globe. The criteria apply both to established toll road facilities with a long operational history as well as to greenfield projects currently under construction, and apply equally to all toll roads rated by Fitch regardless of ownership model.

The report highlights the following six key risk factors which typically determine the rating of debt issued by toll roads:

-- Completion Risk: This driver covers the experience and financial strength of the construction contractor relative to the length of the construction phase, complexity of the project and the construction support package provided. It also covers the financial strength and experience of the sponsors, particularly for complex transport transactions.
-- Revenue Risk - Volume: Nature of the transportation link provided, traffic composition of the asset, the economic and demographic fundamentals of the service area; the exposure, if any, to competing alternatives; and the historical and/or projected traffic profile.
-- Revenue Risk - Price: Legal and political rate-raising ability.
-- Infrastructure Development/Renewal: Approach to the ongoing capital program and maintenance including planning, funding and management.
-- Debt Structure: Overall debt structure and key structural features/composition of capital structure.
-- Debt Service: Leverage, liquidity, and level of dependence on sustained traffic and revenue growth to meet financial obligations.

In addition to further development of these key rating factors, the report also provides supporting credit risk commentary on other risk aspects specific to toll roads. Notably, included as an appendix is a description of how the criteria are applied when analyzing managed lanes projects.

The report should be read in conjunction with Fitch's report 'Rating Criteria for Infrastructure and Project Finance', published Sept. 28, 2015, and expands on the current toll road rating methodology used by Fitch. Further, the toll road criteria may supplement other relevant Fitch criteria when rating financings secured substantially by ad-valorem taxes, general corporate financings not premised on asset-specific analyses, road-related real-estate transactions, and structured/securitized financings. The introduction of this criteria report is not anticipated to result in rating actions.