Moody’s rates Fovial notes Caa3

Moody's Investors Service said it assigned a Caa3 rating to the planned $500 million senior secured notes to be issued by the Fondo de Conservacion Vial de El Salvador (Fovial) with a final maturity in 2030. The outlook is stable. This is the first time that Moody's rates Fovial.

“The Caa3 rating reflects the important financial and operational linkages between Fovial and the government of El Salvador (Caa3, stable). Fovial acts on behalf of the government carrying out the essential public mandate of providing maintenance services to the national road network. Assigned tax revenue and contributions from the government provide financial sustenance for Fovial's operations. Although the obligations under the notes are not directly guaranteed by the government, Moody's considers that Fovial's credit quality to be closely influenced by the government,” the agency said in a press release.

Fovial will primarily use the proceeds to repay local debt, fund a capital expenditure account and a debt service reserve account, and cover transaction fees.

The stable outlook is in line with the agency’s stable outlook for El Salvador, Moody’s said.

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