Fitch Ratings has affirmed Airports Company South Africa Limited (ACSA)’s Short-term rating at ‘F1+(zaf)’ but regrettably downgraded the National Long-term rating from ‘AA(zaf)’ to ‘AA-(zaf)’. The Outlook for the National Long-term rating and Short-term rating remains Stable.
The long term rating downgrade reflects Fitch view which ACSA had already anticipated during the release of last year’s financial statements, that over the next two or three years, contracted capital expenditure and an expected decline in passenger numbers due to economic downturn will increase ACSA’s financial leverage beyond levels considered appropriate for its previous AA (zaf) rating. In addition, ACSA’s current regulatory regime does not remunerate the capital expenditure until they are complete and operational. Thus, the substantial capital expenditure is a burden upon the group’s financial profile.
ACSA has noted the Fitch ratings review and will continue to focus on managing the short term constraints. ACSA had already undertaken a review of the Capital Expenditure programme and postponed, where feasible, uncommitted capital projects in light of the decline in traffic profile. ACSA will complete essential 2010 related projects for efficient facilitation of the soccer world cup which is a strategic initiative for the South African government. It will also continue to drive initiatives to unlock values from existing commercial activities.
As confirmed by Fitch ratings ACSA’s credit profile supported by the long term rating of ‘AA-(zaf)’, which has taken into account the short term cyclical decline in credit profile, remains strong and solid.
Airports Company South Africa
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