Fitch Chops Alsacia

Fitch has downgraded Inversiones Alsacia’s rating to CC from B, it says, based on a “heightened risk of default.” The Santiago bus operator’s Ebitda continues to shrink while debt service increases in accordance with the original amortization schedule. The agency also finds it will be difficult for the Chilean company to keep debt reserve accounts and maintenance accounts funded. “The operating contract amendment of May 2012 heightened the project’s risk profile by significantly increasing the linkage between passenger demand and revenue levels,” Fitch says, noting demand below expectations during the last two years. Alsacia has been hurt by a new concession contract that is less favorable than its previous agreement, resulting in higher costs and strained financial metrics. Holders granted Alsacia covenant debt service and account waivers earlier this month. Alsacia is now at CC/Caa2, after also seeing Moody’s downgrade earlier in the month.