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Close to the Wides

28 November 2019 by jbchevrel

Atlantia SpA (ATLIM) manages, expands, and maintains transport infrastructures under concession. ATLIM manages 14,000 km of toll motorway in Europe, Americas and India. ATLIM also operates electronic tolling systems as well as the airports in Rome and Nice. ATLIM was a member of the Main until s30 included and since then a member of the CrossOver. Today it was the worst-performing name in CrossOver s32, the 5y CDS came wider by +30bp and the curve decently inverted between the 1y and the 5y (-40bp). We close the 1y ~40bp wider than the 5y. This happened as an article from local newspaper La Repubblica claimed that the Democratic Party (PD) may be in agreement with the 5-Star Movement on potentially revoking ATLIM’s ASPI’s concession. The PD had previously been opposed to this revocation and PM Conte (who will have the last word on this issue) could have changed stance. According to this article, the Italian Government would have offered ATLIM’s ASPI a compromise solution with lower tariffs and toll-free travel on some portions of its network, but apparently ASPI refused. The fact that there is a negotiation between the government and ASPI suggest a compromise is still possible. In parallel, La Stampa reported improper checks on other bridges belonging to ATLIM. Earlier this month, ATLIM had responded to La Repubblica article claiming that they had known about safety issues regarding Morandi Bridge since 2014 and that they had downgraded their risk assessment in 2017. ATLIM’s statement said that the Board did not accept any operational risk regarding infrastructure. They denied that ASPI failed to assign the most stringent risk tolerance, as far as Morandi Bridge is concerned. Last week on Nov 20, ATLIM 5y CDS had widened by a similar amount (+35) after ATLIM released a statement announcing its temporary withdrawal from the Alitalia bailout. “Following on from the announcement of 15 October 2019, having noted the lack of any significant developments in relation to the issues raised at that time, the Company announces that, as things stand, the conditions that need to be met in order for Atlantia to be able to take part in a consortium, set up to put together a binding offer for Alitalia, do not as yet exist. In any event, Atlantia continues to be willing to engage in the process of identifying an industrial partner and reaching agreement on a solid, long-term business plan for the turnaround of Alitalia.” After those two subsequent legs wider, ATLIM 5y CDS is now close to the top of the range. It had peaked in 270s in August last year (after the bridge’s collapse) and in mid 260s in early October (ATLIM threatened to pull out of the Alitalia).