Fitch questions Mexico tollroad estimates

Tuesday, December 16, 2014

Third-party traffic and revenue forecasts for Mexican tollroads are continually overestimated, according to Fitch Ratings.

Citing a review of 41 traffic estimates from 2002-13, Fitch said that over half (21) exhibited levels of overestimation, with 12 cases falling into "substantial" and "significant" overestimation. Out of the 41, only 14 were "basically on target," Fitch said.

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"The bias toward optimism is constant, which can increase risk over time," said Fitch director Astra Castillo.

"Because long-term traffic estimates are heavily dependent on the compounding growth, having lower-than-expected growth, especially early, increases the pressure on future performance," Fitch said. "As time goes on, it becomes harder for a road to return to its original projected volumes."

As Fitch's traffic scenarios are conservative in nature, roads that underperform based on their forecasts are generally in line with Fitch's base case estimations, which provide for an overall rating stability, the ratings agency added.