Blog

Our Experts Comment the Times Series

See All the Comments
rss

EC Eyes Closed

13 January 2020 by jbchevrel

Atlantia SPA (ATLIM) was again the underperformer in the CrossOver. The 5y CDS is wider by another +11bp taking the spread to 243bp. The move wider started as the PD, the center left party in coalition with the Five Stars, was said to be ready to revoke the ATLIM concessions. Today the EC said it will not intervene on Italy concessions. ATLIM investors had been meanwhile directly appealing to EU authorities in reaction to an Italian decree signed last month that changed the concession rules. “This is a matter for the Italian authorities only” the EC said. For ASPI, potential compensation for a loss of its concession would be reduced under the new legislation to E6b from E20b+. For context, ATLIM is haggling with the government over compensation for the collapse of the Genoa bridge. The dispute could lead to the loss of their concession to run Italy's motorways (about 3,000 km). Rome wants ATLIM to lower toll fees and, to turn up the heat, last month passed a decree that could make it easier to pull the license and curtail compensation. The move took both Moody's and Fitch to cut ATLIM's ratings, now below IG. PM Conte said to CdS newspaper “The job of this government is to safeguard the public interest, not to guarantee an advantageous future to private license holders, especially if they are in breach of contract”. Not a surprise. the Five Star Movement has been blaming ATLIM for a long time for failure to maintain the bridge, and said many times they want to revoke the license. This is not costless politically though as that could tip ATLIM’s ASPI arm into bankruptcy, and threaten 7k jobs.