RATING DRIVERS
Supporting Factors:
- 35 Year concession agreement supports sustainability of operations
- Regulatory framework provides toll tariff adjustment mechanism to support revenue growth
- Track record of good operating efficiency
- Essential asset for Jamaica which supports prospects for future traffic growth
- Improving financial performance supports cash flow adequacy and comfortable debt service coverage
Constraining Factors:
- Revenue linked to economic downturns
Rating Sensitivity Factors:
Factors that can individually or collectively lead to an improvement in the ratings and/or outlook include:
- An improvement in the credit rating of the sovereign over the next 12-15 months
- Consistent increases in PAT and DSCR over the next 2 to 3 years
Factors that can individually or collectively lead to a lowering of the ratings and/or outlook include:
- A deterioration in the credit rating of the sovereign over the next 12-15 months
- A deterioration in the DSCR to less than 1.2 times for 2 consecutive periods
- A deterioration in the interest coverage ratio lower than 1 time
COMPANY BACKGROUND
Transjamaican Highway Limited (TJH or ‘the Concessionaire’, or the Company) is a limited liability company, incorporated and domiciled in Jamaica to develop, operate and maintain the Highway 2000 East-West toll corridor under a 35-year Concession Agreement that was executed in November 2001 with the National Road Operating and Constructing Company (NROCC or ‘the Grantor’), a state-owned enterprise. In April 2002 NROCC was granted a concession to design, finance, construct, maintain and operate Highway 2000 and levy, collect and retain tolls in respect of that motorway. NROCC delegated its obligation for the East-West corridor to TJH. TJH then contracted Bouygues Jamaica to construct the highway and Jamaica Infrastructure Operator Limited (JIO) to maintain and operate the toll road. In December 2019, 100% of the ownership of TJH was acquired by NROCC. In March 2020, the shares of TJH were listed on the Jamaica Stock Exchange in an initial public offering, thereby creating a new ownership structure with NROCC being the largest shareholder owning 20%, with the 2 other largest shareholders being NCB Capital Markets (Cayman) Limited (7.8%) and Musson Investments Limited (6.1%).
The Highway 2000 project was undertaken by the Government of Jamaica (GOJ) with a view to connecting the major population centres of Jamaica by a comprehensive 230-kilometer (km) highway system. The project, which was officially launched in September 1999, serves to generate economic activity, reduce traffic congestion, and expand tourism activity to the rest of Jamaica. Highway 2000 is the single largest project ever undertaken in the country at a cost of US $1.3 billion and is the first of its kind in the English-speaking Caribbean.
Construction of the highway was split into four phases: 1A, 1B, 2A and 2B. TJH’s concession is for the design, construction, and operation of 49.9 km of motorway along the East-West Corridor that is divided into two routes, T1 and T2. T1 connects Kingston with May Pen via a connection through Spanish Town, while T2 connects Kingston with Portmore. Collectively, these two routes cover 80% of the manufacturing and distribution companies in Jamaica and traverse some of the most densely populated communities in the country. The first toll plaza was opened at Vineyards in 2003 and the fourth at Mineral Heights near May Pen in 2012.
The Toll Authority, established under the Toll Road Act 2002, regulates the operation and maintenance of all toll roads, monitors compliance of concessionaires with the terms and conditions of concession agreements, including changes in tariff rates, and advises the Minister of Economic Growth and Job Creation on matters relating to toll roads in Jamaica.
Analytical Contacts:
Khadine Tavares
Tel: 1-876-618-9813
E-mail: [email protected]
Keith Hamlet
Tel: 1-868-627-8879 Ext. 229
E-mail: [email protected]
Website: www.caricris.com
Email: [email protected]
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