S&P rates Costanera Norte hwy. bonds AAA

Standard & Poors has assigned its preliminary AAA long-term rating to US$270mn in bonds to be issued by concessionaire Costanera Norte, which is building an expressway in Chilean capital Santiago, S&P said in a statement Wednesday. S&P has also assigned the bonds, which will be issued in Chile's inflation indexed unit, the UF, its underlying rating (SPUR) of BBB. The outlook is stable. "The AAA rating reflects an unconditional and irrevocable guarantee of payment of scheduled interest and principle on the notes provided by Ambac Assurance Corp. (AAA/Stable-) and the Inter-American Development Bank (AAA/Stable/A-1+)," said S&P credit analyst Pablo Lutereau. "The BBB SPUR reflects the risks posed by the implementation of the free-flow system and the uncertainties about the willingness of users to pay for currently free-available roads. However, the fact that the financing is structured around a Minimum Revenue Guarantee (MRG) from the Ministry of Public Works (MOP) of the Republic of Chile (A-/Positive/--) mitigates those risks at the BBB level," Lutereau added. The US$442mn, 30km expressway will link Santiago's northeast with the city's west, and is slated to be finished by end-2004. The project also includes a 4.75km, US$14mn extension to connect the expressway with highway Ruta 68 that connects Santiago with Region V port city Valparaiso and neighboring coastal city Vina del Mar. Impregilio (70%), Simest (10%), Empresa Constructora Tecsa (10%) and Empresa Constructora Fe Grande (10%) make up the Costanera Norte consortium, which won the 30-year concession in 1999.