Fitch upgrades Paita to 'BB+' from 'BB'; outlook stable

Paita's upgrade to 'BB+' reflects the strong volume and revenue performance historically observed, which resulted in financial metrics in excess of Fitch's projections, along with the expectation of this trend being maintained in the long term.

While Fitch continues to recognize the asset is primarily regionally focused, the coronavirus pandemic had no significant effects on the asset's performance and Fitch expects future volume growth will continue to be driven by agricultural and finishing products foreign demand and local production levels.

The upgrade also incorporates the successful prefunding of the Phase III capital improvement program. In past reviews, Fitch's projected metrics were affected by the provisions expected to fund the expansion, constraining the project's rating. 

Paita's rating reflects a weaker port asset with relatively high volatility and some reliance on cargo types, business lines and customers, along with modest flexibility to manage toll increases. The rating also considers the project's obligation to perform capital investments once certain thresholds are met, leading to tighter financial ratios and potential dependence on cash reserves, exposure is mitigated by the appropriate prefunding mechanism.

Although the coronavirus pandemic had significant effects on most transportation assets, ports have shown greater resilience due to their cargo transport nature. In particular, the effects on Paita have been very limited compared with those observed under Fitch's rated portfolio.

Fitch revised its rating case to incorporate the better than expected volume of 2020. The rating case minimum and average debt service coverage ratio (DSCR) is 2.1x and 2.7x, respectively which could indicate a higher rating, according to applicable criteria. However, the rating is currently limited by the potential effects of the coronavirus pandemic.