>EUROPEAN INFRASTRUCTURE: Rising Leverage Concerns Causes Equity/Debt Disconnect

■ Widespread equity sell-off contrasts with debt stability of specific companies — Credit concerns have returned to haunt the Infrastructure space with a vengeance over the past couple of weeks as increasing worries over a second round of the credit crunch have resurfaced against a backdrop of spreading sovereign risk fears. In this context, and with slowing growth expectations for the European economies (particularly in the periphery) S&P cut Brisa's rating by one notch to BBB-, from BBB (although raising its outlook to stable from negative). This followed a similar downgrade for Abertis (4/10) to BBB+. Rising risk aversion, however, has affected the whole sector recently with stocks falling globally by 10- 20% over the last month. Nevertheless, while the stock market has punished in a seemingly indiscriminate fashion, fixed income markets have been more selective.

■ Greece looks to sell infrastructure assets; Athens airport a potential candidate — The Greek government is looking to raise c€3bn during 2011-13 via the privatisation of several assets including Athens International Airport. AIA is 55% owned with Hochtief holding a further 26.7% and the 13.3% balance in the hands of HTAC, an airport fund owned by CDPQ, Hastings and KfW, but managed by German contractor. Athens airport handled 16.2m pax in 2009 (-1.5%) and Ebitda jumped 46% to €316m due mainly to the recovery of the previous year's impairment charges. For 2010 the company expects a slight dip in pax to 15.8m.

To read the full report: EUROPEAN INFRASTRUCTURE