Cintra: US traffic recovery in 2009 unlikely

A bellweather for toll road concessionaires globally, the Spanish toll road operator said it would ‘be a surprise’ if traffic on its US toll roads improved next year. Despite the weak traffic conditions, Cintra reported increased revenues of €806.9m for the first nine months of the year.

Spanish toll road and parking garage operator Cintra, a frequent partner in US toll road concessions alongside affiliates of Sydney-based Macquarie Group, said traffic on its US concessions would likely see continued weakness in 2009.

Cinta's toll roads:
weak traffic

Jorge Gil Villen, Cintra’s head of corporate development, said during the firm’s third quarter earnings call that “it will be a surprise if traffic recovers in 2009” in the US, where the Madrid-based concessionaire owns a 50 percent equity stake in the 253 kilometre Indiana Toll Road and a 55 percent equity stake in the 12.5 kilometre Chicago Skyway toll bridge.

Villen joins a growing body of market observers and investors who have shared similar sentiments in recent months. In August, credit ratings agency Fitch downgraded its outlook on toll roads from “stable” to “negative”, cautioning that a number of economic factors such as high fuel prices, currency exchange fluctuations and a deteriorating economic situation are challenging the creditworthiness of US tolling projects.

For the first nine months of 2008, Cintra reported traffic decreases of 7.7 percent and 9.9 percent on the Chicago Skyway and Indiana Toll Road, respectively, over the same period last year.

Both concessions were awarded in 2004 to Cintra alongside the Macquarie Infrastructure Group, a Sydney Stock exchange-listed infrastructure fund managed by Macquarie. Since the original investment, MIG has sold down half of its equity stakes in both concession companies. A third Cintra concession in Texas is currently under construction and not yet open to traffic.

Despite losing in its $8.1 billion bid with Macquarie for the Pennsylvania Turnpike, the toll road operator continues to actively bid for new concessions in the US and elsewhere. It has presented bids for five projects in Poland, Portugal in the US, according to its third quarter results presentation.

Alongside the weakened traffic figures, Cintra reported an increase in EBITDA of 4.9 percent to €545.9 million and a revenue increase of 5.3 percent to €806.9 million for the first nine months of the year in comparison with the same period last year.