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alfathoughts: Analyzing Audasa bond issue

Saturday, September 14, 2013

Analyzing Audasa bond issue

We few days seeing some ads on TV about ENA bond issue , specifically what are issued € 193 million in obligations AUDASA ( Atlantic Highway Concessionaire Spanish , SAU ) . How ever there is a minority investor placement must ask why not a debt placement as the small size of AUDASA not between institutional investors.

Toll revenues depend on the number of vehicles using the infrastructure daily and the number of users is directly related to the economic situation and community of Galicia where it operates .

The evolution AUDASA activity along the year 2012 has been characterized by a negative trend in traffic levels as a result of the deepening economic crisis affecting Spain . A general situation contraction of economic activity . The AUDASA toll revenues in 2012 are reduced from last year by 8.7 % , reaching 132.4 million euros. This was due to a decrease in traffic charging 12.48% on average , partially offset tariff revisions approved with effect from 1 January 2012, which was 3.29%. The average daily traffic (ADT ) of the set of all operating segments was tolled 19,568 vehicles ( 22,359 vehicles during 2011 )

Audasa has chosen not to include a profit forecast or estimate . No wonder , in the fall of 2012 , we know that the Spanish toll roads have recorded the worst start to a year in terms of traffic volume for the past 16 years , since the last January accounted for an average of 12,414 daily users , down 10.7% over the previous year and the lowest figure for the month since 1997 . All indications are that 2013 will be even worse.

Audasa 's main asset is the Atlantic Highway called the grant was awarded on August 17, 1973 . The route of the motorway is 219.6 km, extending from El Ferrol to Tuy Portuguese border . It is a mature asset quality and whose concession expires in 2048 .

The current issue of debentures is made to pay debt issuance by euro 193 million due this June 2013 . I enclose have evolved as income and cash flows of AUDASA between 2011 and 2012 and do our forecast a fall in revenue for 2013 . Although throughout the concession, up to 2048 , it appears that AUDASA afford to pay its debt , the risk faced by investors in the current issue of AUDASA obliogaciones is that between 2013 and 2023 ( when their doom debenture ) the company does not generate enough cash flow to pay the principal of all releases due in this period of time.

This means investors are bond issues, are at risk of AUDASA not be able to refinance its debt maturities .
Who is the owner of AUDASA :

We leave the scheme who are AUDASA owners . The ultimate owners are: PEAR is a vehicle Investment Citi Infrastructure Partners, we also have a number of old savings banks, as Kutxabank , NCG , CAIXANOVA CajAstur and Sacyr with 15.51% . AUDASA belongs to ENA Infrastructure is in turn belongs to Itínere and is part of the investors mentioned above.
Audasa property

The issue has AUDASA ENA joint guarantee , although it is noted that AUDASA is a significant part of the income of ENA ( Audasa accounts for 68 % of financial revenues ENA )
Bond Issuance AUDASA

The nominal amount of the offer covered by this document is 193,000,000 euros, represented by obligations 386,000 nominal value of EUR 500 each. Among the major underwriters are Bankia , CaixaBank , Banco Popular, Caja3 , SpreadCo and Bankinter . The minimum is 1 to subscribe obligation nominal value of EUR 500 .
Interest rate obligations AUDASA

The nominal interest rate (coupon ) applicable to the issuance is 5.20 % annually. The nominal interest rate shall accrue from the June 26, 2013 and until the final redemption of the issue , ie June 26 202 3

Interest payments will be made annually in arrears , on December 15 of each year and on the date of redemption .

The first interest payment date will take place on December 15, 2013 and the last on June 26, 2023 , ie , coincides with the date of redemption .

Annual Coupon value = 500 x 5.20% = 26.00 euros

The IRR is 5.20 % (including tax flows of savings income would be 5.29% for a tax rate of 21%, from 5.09% to a rate of 25 % and a 4, 99 % to a rate of 27 % ) .
Summary :

I personally would not invest in a 10-year bonds , which may be difficult to sell in the secondary market or we can see that the price may fall if the required return to rise to the Spanish bond to obtain a yield of 5.20 % active one whose incomes are falling and to be refinanced in order to return the debt principal .

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