OREANDA-NEWS. January 19, 2016. Fitch Ratings has affirmed SEMAPA's (AA-/Negative/F1+) EUR250m French commercial paper (CP) programme's Short-term local currency rating at 'F1+'.

The CP programme's rating reflects SEMAPA's sound liquidity management and the adequate back-up package for CP issues.

KEY RATING DRIVERS
To cover its financing needs, SEMAPA has diversified its funding packages with a Euro Medium-Term Notes (EMTN) programme with a ceiling of EUR340m (80% of which is guaranteed by the City of Paris; AA/Negative/F1+) and a CP programme. The increase of the CP programme ceiling to EUR250m from EUR150m will allow SEMAPA to balance long-and short-term funding according to SEMAPA's strategic debt management policy.

SEMAPA plans to achieve maximum issues of EUR150m corresponding to its current back-up of two credit lines totalling EUR150m. Fitch will monitor the level of the back-up package, which will increase in the medium term. Fitch believes SEMAPA's CP issuance benefits from the reputation of its sponsor in the capital markets, as SEMAPA plans to issue CP in connection with Paris's CP issuance.

SEMAPA's ratings reflect the tight control by and strong support from the City of Paris, its 92% owner and public sponsor. The one notch difference from the sponsor's rating is driven by Fitch's assumption that its strategic importance is rather weak and its moderate integration to the sponsor's budget. SEMAPA's debt is not included in Paris's accounts but Fitch considers SEMAPA's debt as indirect debt of the city. The Outlook on SEMAPA's IDRs reflects that on the city. Fitch rates SEMAPA (credit-linked) on a top-down basis under its public-sector entities rating criteria,

SEMAPA's activity consists of acquiring land and subsequently monetising the assets it develops. Due to the limited size of equity (EUR5.2m at end-2014) in comparison with the size of the operations, SEMAPA is forced to rely on external financing. In the medium term, its financial needs will reach a peak at EUR424.2m during 2Q2017 and slightly decline thereafter.

RATING SENSITIVITIES
The CP programme's rating is aligned with SEMAPA's rating. Changes to SEMAPA's rating would be mirrored in the CP programme's rating.

Changes to SEMAPA's ratings could stem from rating action on the City of Paris, or from a shift in the city's control and financial support of SEMAPA.