Fixed Income Analysis /
Italy

Credit Comment - Atlantia/Autostrade per l’Italia: ATOSTR still attractive despite another turn of events

    Christian Aust
    Christian Aust

    Head of Corporate Credit Research - Industrials, Oil & Gas

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    UniCredit
    9 April 2021
    Published byUniCredit
    • ACS (--/BBB-s/--) chairman Florentino Perez has approached Atlantia regarding a potential offer for the 88% stake in Autostrade per l’Italia (ASPI, Ba3dev/BB-dev/BB+dev). An article in the Financial Times mentioned a valuation of EUR 10bn for 100% of ASPI in the ACS offer, which would be around 10% above the EUR 9.1bn the CDP consortium offered on 31 March (not incorporating potential indemnification for future damages the CDP consortium is seeking from Atlantia). Atlantia’s board confirmed that it is meeting in the coming days to discuss the binding offer by the CDP consortium as well as ACS’s “expression of interest”. Besides possibilities for the Italian government to substantially sour or even block an ASPI sale to ACS, we believe CDP and its co-investors have the means (and willingness, if really needed) to at least match a potential offer by ACS. An improved offer would also reduce litigation risk for Atlantia following a sale, in our view.
    • ATOSTR still attractive, also in an ACS takeover scenario. While a higher price for ASPI would be slightly positive for ATLIM bonds, we still think chances for a successful takeover by ACS (without CDP involvement) are limited at this stage and maintain a hold recommendation on Atlantia. To avoid doubt, a slightly higher price for ASPI alone, without clear communication of use of proceeds/strategy and financial policy, would unlikely be sufficient to trigger a recommendation change for Atlantia on our side. However, in both takeover scenarios, we regard current ATOSTR trading levels as attractive, although the missing implicit support assumption by CDP would likely mean a longer road back to IG for ASPI in the ACS takeover scenario. Consequently, we maintain a buy recommendation on ASPI.
    • Getting closer to a successful separation of ASPI from Atlantia has supported both issuers’ bond curves this year. ATLIM and ATOSTR bonds have performed strongly YTD, tightening between 50-90bp since the start of the year as expectations regarding a successful closing of a sale to the CDP consortium have increased. The ATOSTR front-end has slightly outperformed as the curve began to normalize. While ATOSTR bonds trade at YTD-tights, overall spread levels still leave 30bp tightening potential to Baa2wneg/BBBwneg rated Italian peer ATIM and around 50-75bp potential to BBB-s/BBBn rated ABESM holding bonds, and we would expect shorter-dated ATOSTR bonds to continue to outperform spread-wise.