Global Infrastructure & Project Finance
Toll Roads
Mexico
Special Report
Analysts
Astra Castillo Trevizo
+52 81 8399-9100
astra.castillo@fitchratings.com
Maricela Flores Villarreal
+52 81 8399-9100
maricela.flores@fitchratings.com
Alberto José Santos
+1 212 908-0714
alberto.santos@fitchratings.com
Related Research
• Latin American Infrastructure &
Project Finance 2010 Outlook,
March 2, 2010
• Global Infrastructure & Project
Finance 2010 Outlook,
March 1, 2010
• Rating Criteria for Infrastructure
and Project Finance, Sept. 29, 2009
• Latin America Toll Roads: Global
Credit Crisis Causes Bumpy Road
Ahead, June 17, 2009
• U.S. Toll Roads and the 2007−2008
Recession: A Diagnosis
Performance, June 11, 2009
www.fitchratings.com
Mexican Toll Roads: The Impact of
the 2009 Crisis
Summary
• A few months into 2010, it is now possible to assess with greater clarity the impact
the global economic crisis has had on the Mexican economy. A health alert early in
the year, combined with social and political issues later on, affected a large portion
of the country’s economic activity in 2009.
• After 13 years of continued growth, toll roads exhibited a significant reversal in
their performance last year, with traffic volume and toll revenues recording
substantial declines.
• More importantly, plummeting revenues degraded the payment ability of
securitizations backed by toll flows. Furthermore, the implementation of two new
taxes (IDE and IETU) in 2008 put additional pressure on results, leading, in some
cases, to a significant increase in tax payments relative to previous years.
• Nonetheless, thanks to the lessons learned from the 1995 crisis, toll road
securitizations in Mexico now have mechanisms in place that aid the liquidity of
these structures. As a result, in 2009, Fitch Ratings affirmed the ratings of 13 of the
16 toll road securitizations currently rated by the agency.
• The objectives of this report are as follows:
o To list the key factors affecting toll road performance.
o To describe the pre-crisis performance of the 24 toll road segments monitored
of by Fitch.
o To explain the impact the recent crisis had on toll road assets and the
structures backed by their flows.
May 14, 2010
 Global Infrastructure & Project Finance

Fitch-Rated, Toll Road Structured Bond Portfolio

At present, Fitch rates 16 debt issuances backed by flows from 24 toll road segments:

Mexican Toll Road-Backed Securities Rated by Fitch

(MXN Mil., As of Dec. 31, 2009)

Balancea
Toll Road Issuance (Ticker) Maturity ($) Rating Outlook
Armería ⎯ Manzanillo ARMEC 03U May-15 564 AAA(mex) Stable
Ecatepec ⎯ Pirámides ⎯ ⎯ ⎯ ⎯ ⎯
Puebla ⎯ Atlixco ATLIXCB 04U Aug-19 500 AAA(mex) Stable
Sueco ⎯ Villa Ahumada CHIHCB 02U / 02-2U Nov-12 1,593 AAA(mex) Stable
Delicias ⎯ Conchos CHIHCB 09 Aug-22 5,500 AA+(mex) Stable
Conchos ⎯ Camargo ⎯ ⎯ ⎯ ⎯ ⎯
Camargo ⎯ Jiménez ⎯ ⎯ ⎯ ⎯ ⎯
Chihuahua ⎯ Sacramento ⎯ ⎯ ⎯ ⎯ ⎯
Santa Isabel ⎯ Cuauhtémoc ⎯ ⎯ ⎯ ⎯ ⎯
Ojo Laguna ⎯ Flores Magón ⎯ ⎯ ⎯ ⎯ ⎯
Flores Magón ⎯ Galeana ⎯ ⎯ ⎯ ⎯ ⎯⎯
Jiménez ⎯ Savalza ⎯ ⎯ ⎯ ⎯
Atlixco ⎯ Jantetelco CONCECB 06U Sep-26 502 AA+(mex) Stable
Peñón ⎯ Texcoco CPACCB 04 Dec-21 1,773 AA(mex) Stable
Libramiento Fresnillo FREZAC 05 Mar-20 1,316 AA+(mex) Stable
Libramiento Noreste de Zacatecas ⎯ ⎯ ⎯ ⎯ ⎯
Libramiento Calera ⎯ Enrique Estrada ⎯ ⎯ ⎯ ⎯ ⎯
Kantunil ⎯ Cancún MAYAB 02-AU Feb-19 1,381 AA(mex) Stable
MAYAB 02-BU Dec-20 267 A(mex) Stable
Toluca ⎯ Atlacomulco OCALFA 95U May-26 656 A+(mex) Stable
Libramiento Plan del Río PLANRIO 05U Mar-20 306 AA(mex) Stable
PLANRIO 05-2U Mar-30 234 A(mex) Stable
Tenango ⎯ Ixtapan de la Sal TENANCB 05U Oct-22 809 AA−(mex) Stable
Túnel de Acapulco TUCACCB 08 Dec-33 1,250 AA−(mex) Negative
Cardel ⎯ Veracruz VCZ 03U Nov-14 482 AAA(mex) Stable
El Altar ⎯ Santa Ana ZONALCB 06U Dec-31 1,838 B−(mex) Negative
Source: Comisión Nacional Bancaria y de Valores.

On a monthly basis, the agency tracks the performance of both traffic and revenue
generation for each of the road segments. In addition, Fitch monitors the debt
issuances backed by the flow of these segments on a semi-annual basis, verifying that
the respective trust maintains adequate levels of liquidity and coverage in order to
detect any event that may potentially affect the solvency of the rated debt structures.
Fitch thoroughly reviews each structure annually, analyzing the recent performance of
each asset and liability and running in depth projections of expected performance
throughout the maturity of the debt instrument. The structures may be reviewed more
frequently if a particular event or an extraordinary situation calls for an update.

Determinants of Asset Performance

Although the timely repayment of a bond largely depends on the characteristics of its
debt structure, it is the performance of the underlying asset or payment source that
ultimately determines the instrument’s credit risk and payment ability.
For this reason, Fitch has identified the four principal determinants of asset
performance. While the overall economic environment is by far the most important
factor, given Mexico’s large size and significant regional differences, this variable tends
to be more meaningful when considering the local economy surrounding each toll road
asset in particular.

2 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
 Global Infrastructure & Project Finance

The principle determinants are as follows:

• Geographic location.
• Years of operation.
• Advantages relative to the competing free road.
• Reasons for usage.
Geographic Location
Not surprisingly, those toll roads located in the more dynamic areas have the busiest
traffic patterns and highest revenues. Another important factor is the existence of other
projects in close proximity to the toll road that may significantly alter the traffic pattern
within the region. One example is the Libramiento Calera–Enrique Estrada road in
Zacatecas (securitized in FREZAC 05), which saw an increase in traffic of over 20% in 2008
as a result of the construction of a bridge in a neighboring area. The map below
illustrates the location of the 24 road segments backing the structures rated by Fitch.

Toll Roads State Region

1 Armería ⎯ Manzanillo COL Central West
24 2 Ecatepec ⎯ Pirámides MEX Central
4 to 12 3 Puebla ⎯ Atlixco PUE Central
4 Sueco ⎯ Villa Ahumada CHIH Northeast
5 Delicias ⎯ Conchos CHIH Northeast
6 Conchos ⎯ Camargo CHIH Northeast
7 Camargo ⎯ Jiménez CHIH Northeast
8 Chihuahua ⎯ Sacramento CHIH Northeast
9 Santa Isabel ⎯ Cuauhtémoc CHIH Northeast
10 Ojo Laguna ⎯ Flores Magón CHIH Northeast
11 Flores Magón ⎯ Galeana CHIH Northeast
12 Jiménez ⎯ Savalza CHIH Northeast
18 13 Atlixco ⎯ Jantetelco PUE/MOR Central
14 Peñón ⎯ Texcoco MEX Central
15 Libramiento Fresnillo ZAC Central West
15 to 17 20, 23 16 Libramiento Noreste de Zacatecas ZAC Central West
17 Libramiento Calera ⎯Enrique Estrada ZAC Central West
18 Kantunil ⎯ Cancún YUC/QROO Southeast
19 Toluca ⎯ Atlacomulco MEX Central
20 Libramiento Plan del Río VCZ Southeast
1 21 Tenango ⎯ Ixtapan de la Sal MEX Central
22 Túnel de Acapulco GRO Central West
23 Cardel ⎯ Veracruz VCZ Southeast
22 3, 13 24 El Altar ⎯ Santa Ana SON Northwest

Years of Operation
Toll roads are characterized by a life cycle that comprises three distinct phases:
i) ramp-up, ii) growth, and iii) maturity.
The ramp-up phase encompasses the first two to four years of operation and is
characterized by a rapid increase in traffic. However, sometimes growth rates
registered during this period may not be proportionate to revenue growth, as toll roads
tend to offer a reduced “introductory” rate during this phase to attract potential
customers.
After an initial period of fast expansion, toll roads enter a phase of more moderate
expansion (the “growth” phase). A slowdown in the growth rate is normal and,
therefore, does not necessarily reflect a deficient performance.
Finally, those roads that have been in operation for over a decade enter a more
“mature” phase, in which no significant changes in traffic patterns are expected unless
there is some kind of extraordinary event taking place in the area. Analytically, mature
toll roads have the advantage of a long performance history, which provides useful
information when formulating projections.

Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 3
 Global Infrastructure & Project Finance

However, while “seasoning” effects are significant, the number of vehicles traveling on
a particular toll road is more related to the GDP of the area than to the age of the
asset. The table below shows the year in which each toll road initiated operations.

Operating Years by Toll Road

Toll Road Operates Since Years Operating
1 Armería ⎯ Manzanillo 1991 19
2 Ecatepec ⎯ Pirámides 1992 18
3 Puebla ⎯ Atlixco 1989 21
4 Sueco ⎯ Villa Ahumada 1991 19
5 Delicias ⎯ Conchos 1991 19
6 Conchos ⎯ Camargo 1991 19
7 Camargo ⎯ Jiménez 1991 19
8 Chihuahua ⎯ Sacramento 1991 19
9 Santa Isabel ⎯ Cuauhtémoc 1991 19
10 Ojo Laguna ⎯ Flores Magón 1991 19
11 Flores Magón ⎯ Galeana 2000 10
12 Jiménez ⎯ Savalza 1991 19
13 Atlixco ⎯ Jantetelco 2003 7
14 Peñón ⎯ Texcoco 1994 16
15 Libramiento Fresnillo 1993 17
16 Libramiento Noreste de Zacatecas 2005 5
17 Libramiento Calera ⎯ Enrique Estrada 1993 17
18 Kantunil ⎯ Cancún 1991 19
19 Toluca ⎯ Atlacomulco 1991 19
20 Libramiento Plan del Río 2004 6
21 Tenango ⎯ Ixtapan de la Sal 1995 15
22 Túnel de Acapulco 1996 14
23 Cardel ⎯ Veracruz 1994 16
24 El Altar ⎯ Santa Ana 1990 20

Advantages Relative to the Competing Free Road

The success with which a toll road is able to attract traffic largely depends on the toll
road’s advantages relative to the alternative free route. Comparative advantages may
include safety, road conditions, and time savings/shorter distance, among others.
The traffic patterns experienced by toll roads that exhibit clear comparative
advantages tend to be less volatile than those of toll roads with less obvious benefits
relative to the competition. In other words, the price-time savings (cost-benefit)
perception of a user is an important factor when deciding whether to pay a fee or use
the free road.

Reasons for Usage

Depending on the purpose for which they are being used, toll roads can be classified
into three types: urban, commercial, and tourist. As evidenced by the 2008–2009 crisis,
this is one of the most important factors influencing the performance of toll road assets.
The recent crisis made clear that, by identifying the category under which a particular
toll road falls, it is possible to estimate the extent to which the road may be affected
by a downturn in the economy.
The table on the following page shows the classification of the various toll roads
monitored by Fitch. It should be noted that the same toll road may have more than one
purpose and that the table shows only the primary use of each road.

4 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
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Roads Classified by Purpose of Usage

Urban Roads
Ecatepec ⎯ Pirámides
Puebla ⎯ Atlixco
Santa Isabel ⎯ Cuauhtémoc
Atlixco ⎯ Jantetelco
Peñón ⎯ Texcoco
Libramiento Calera ⎯ Enrique Estrada
Toluca ⎯ Atlacomulco
Libramiento Plan del Río
Cardel ⎯ Veracruz
Tourist Roads
Kantunil ⎯ Cancún
Tenango ⎯ Ixtapan de la Sal
Túnel de Acapulco
Commercial Roads
Armería ⎯ Manzanillo
El Altar ⎯ Santa Ana
Libramiento Fresnillo
Libramiento Noreste de Zacatecas
Sueco ⎯ Villa Ahumada
Delicias ⎯ Conchos
Conchos ⎯ Camargo
Camargo ⎯ Jiménez
Chihuahua ⎯ Sacramento
Ojo Laguna ⎯ Flores Magón
Flores Magón ⎯ Galeana
Jiménez ⎯ Savalza

Type 1: Urban Toll Roads

• These are primarily used during the week with regard to school and commuting
activity.
• For the nine urban toll roads that Fitch follows, automobiles represent an average
83% of total traffic, with the remainder being distributed between mass transit and
cargo vehicles.
• Since cars pay a lower fee than trucks, automobiles represent an average 64% of
total revenues.
• These roads tend to be more resilient to fluctuations in the economy.
Type 2: Tourist Toll Roads
• These roads lead to communities that are primarily dedicated to tourism.
• While also used for other purposes, these are classified as tourist toll roads because
their risks are more directly related to the tourism industry in the area of
influence. For instance, although most of the traffic on the Kantunil-Cancún road
stems from commuters, the majority of the businesses that workers are commuting
to are related to the tourism industry.
• The traffic breakdown by type of vehicle tends to be similar to that of urban roads,
with automobiles representing an average 83% of total traffic and an average 61% of
total revenues in the three tranches followed by Fitch.
• By relying primarily on the area’s tourism activity, these roads tend to be more
vulnerable to the general economic environment. In addition, these roads tend to
be more exposed to natural disasters, such as hurricanes, floods, and earthquakes,
as well as to social issues such as national security concerns and epidemics.
Type 3: Commercial Toll Roads
• These are roads that are primarily used for the shipment of goods throughout the
country and abroad.
• The traffic composition of these roads differs significantly from the two types
described above, with automobiles and commercial vehicles representing 62% and
34%, respectively, of total traffic.
• The relative importance of cargo vehicles becomes even more evident when taking
into consideration the total amount of tolls collected, with commercial vehicles
representing 60% of total revenues.
• Consequently, this type of road tends to be the most sensitive to downturns in the

Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 5
 Global Infrastructure & Project Finance

economy, experiencing the fastest and steepest drops in usage. Conversely, these
roads tend to show the most rapid response to a recovery in economic activity.

Pre-Crisis (2005–2008) Performance

Traffic
Toll road traffic has historically been relatively stable in Mexico. The chart below shows
annual growth rates for the toll roads monitored by Fitch.

Total Traffic Growth 1994–2008

(%)
10.0
8.0
6.0
4.0 8.5 8.5 7.7 7.8 7.8
6.5 6.1 6.8 6.4
5.4 5.4 5.3
2.0 3.2
2.7
0.0 1.2
Ramp-Up

(2.0)
(4.0)
(6.0)
(8.0) (6.4)

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

In 1995, toll road traffic grew by 2.7% despite the severe economic crisis experienced
that year. However, this was primarily attributable to the ramp-up of the Peñón-
Texcoco (CPACCB 04) road, which, due to its strong initial growth, represented 22% of
the total volume of all toll roads combined.
When excluding the new road, it becomes clear that the 1995 crisis had a significant
impact on toll road traffic, with total
traffic dropping by as much as 6% that
year. However, the recovery 2008 Traffic Growth Summary
materialized relatively quickly, as only a
a few months later, all 24 toll roads 2008 Growth Number of Roads
Above 10% 2
recorded a rebound in traffic. Between 5% and 10% 4
Between 0% and 5% 11
In 2008, the majority of the roads Negative 7
registered growth rates that were a
Refers to the growth rate of each individual toll road segment.
within expectations.
Roads with growth exceeding 10%: One of these was in its ramp-up phase, while the
other benefited significantly from the construction of a bridge near the road.
Roads with growth between 0% and 10%: The consistent, moderate growth rates of
these assets reflect their average age (of 16 years), as well as the economic stability
recorded in Mexico during that year.
Roads with negative growth: One of these (an urban road) was severely affected by
construction performed on a connecting road, while another suffered from a variety of
factors that prevented it from capturing the minimum amount of traffic anticipated
prior to its ramp-up.
The five remaining roads, which are located in Chihuahua and used for commercial
purposes, exhibited positive growth until the third quarter of 2008. During the fourth
quarter of the year, however, they started to record a continued decline in traffic as a

6 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
 Global Infrastructure & Project Finance

result of the global economic and financial crisis. The fact that these toll roads were
the first to show a decline in volume provides evidence that the crisis entered the
country from its northern border.

Revenues
While it would be logical to believe that changes in traffic volume are similar or
proportional to changes in revenues, this has not always been the case, as total
revenues not only depend on traffic patterns, but also on the specific situation faced by
each road, including:

• Discounts for different types of vehicles (e.g., discounts for cargo vehicles as an
incentive to travel via a particular toll road).
• Preferential tariffs for certain types of vehicles (e.g., special tariffs for residents of
the area).
• Weekend tariffs.
• Changes in traffic composition.
• Extraordinary increases in tariffs that have been previously approved by the
governing authorities.
• Lagging tariffs, given that toll adjustments are not always completely in line with
inflation.
When confronted with any of these situations, toll roads that are experiencing growth
in traffic frequently record a decline in revenues, or vice versa. (It should be noted that
revenue figures in this report are peso denominated, before value-added taxes, and
expressed in real terms as of Jan. 31, 2010.)

Total Revenue Growth 1994–2008

(%)
20.0
15.0
10.0
15.3
5.0 10.9 11.3 8.8 8.5 9.4
7.2 7.6 6.9 6.9 1.6
0.1 3.9
0.0 (2.5)
(5.0)
(13.2)
(10.0)
(15.0)
(20.0) (4.2) Without Ramp-Up
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

The tequila crisis led to a strong 2008 Revenue Growth Summary

deterioration in real revenues in
2008 Growtha Number of Roads
1995, followed by another decline in
Above 10% 3
1996, as tolls were unable to keep up Between 5% and 10% 4
with a respective 52% and 28% Between 0% and 5% 8
inflation rate during those years. Negative 9
a
Refers to the growth rate of each individual toll road segment.
Despite the fact that nine out of the
24 analyzed roads ended 2008 with a
decline in revenues, total revenues increased by 1.6%, as some of the weaker
performers were relatively insignificant in terms of traffic volume.

Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 7
 Global Infrastructure & Project Finance

Actual Versus Projected Performance

Prior to a toll road securitization, experts analyze traffic patterns in order to estimate
the volume that may be expected from a specific asset, at least during the lifespan of
the structure.
Fitch uses these projections as general guidelines for its credit analysis of a particular
structure, although it should be
noted that Fitch’s own traffic
forecasts are always lower than the Traffic: Real Versus Projected
most conservative scenario provided
2007 2008 2009
by the experts.
Above High Scenario 10 9 7
Between High and Base Scenario 3 2 3
The table on the right shows the Between Base and Low Scenario 5 5 5
actual performance exhibited by the Under Low Scenario 6 8 9
monitored toll roads during the Total Roads 24 24 24

2007−2009 period and contrasts it

with the scenarios provided by traffic
engineers years ago. Traffic: Real Versus Projected
Total Roads
The chart on the right illustrates the Under Low Scenario
impact that the recent crisis has had Between Base and Low Scenario
on toll roads, with an increasing Between High and Base Scenario
proportion of cases exhibiting a Above High Scenario
performance inferior to that of the
base-case scenario being evident.
However, it should be noted that the
impact has been less severe than
might have been expected, as those
road segments with high growth rates
since their startup were able to rely
on a safety cushion to absorb the 2007 2008 2009
decline in traffic volume while still
exhibiting above-base-case-scenario
performance.

The Impact of the 2009 Crisis on Performance

Traffic
As mentioned before, the first signs of the crisis were felt during the fourth quarter of
2008 after the collapse of Lehman Brothers. While the impact was more noticeable for
the commercial roads near the U.S. border, other toll roads throughout Mexico were
affected as well. After growing by an average of 5.5% during the first nine months of the
year, traffic volume slowed or even declined depending on the location, leading to an
overall growth rate of 3.2% for full-year 2008, which was half of the rate recorded in 2007.
The year 2009 “consolidated” the crisis for Mexican toll roads, with year-over-year
traffic volume declining by 3.6% in 2009.

8 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
 Global Infrastructure & Project Finance

Total Traffic Growth 1994–2009

(%)
10.0
8.0
6.0
4.0 8.5 8.5 7.7 7.8 7.8
6.5 6.1 6.8 6.4
5.4 5.4 5.3
2.0 2.7 3.2
0.0 1.2

Ramp-Up
(2.0) (3.6)
(4.0)
(6.0)
(8.0) (6.4)

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

The table below shows the monthly change in the annual average daily traffic (AADT) in
2007, 2008, and 2009. This AADT is cumulative, which means that it shows the traffic
recorded during all of the months up to a certain date in order to provide a perspective
of the trend for the entire year and not for a single month. For example, the AADT
accumulated until March comprises the total traffic registered during the first three
months of the year and is compared with the same period of the previous year.

2007−2009 Monthly Traffic Performance

CUM CUM CUM
Month AADT VAR % Month AADT VAR % Month AADT VAR %
January 2007 234,889 ⎯ January 2008 248,280 5.7 January 2007 246,892 (0.6)
February 2007 231,615 ⎯ February 2008 246,732 6.5 February 2009 240,687 (2.4)
March 2007 233,288 ⎯ March 2008 256,207 9.8 March 2009 239,095 (6.7)
April 2007 239,357 ⎯ April 2008 251,097 4.9 April 2009 243,950 (2.8)
May 2007 237,730 ⎯ May 2008 251,073 5.6 May 2009 240,279 (4.3)
June 2007 236,839 ⎯ June 2008 249,785 5.5 June 2009 239,033 (4.3)
July 2007 240,012 ⎯ July 2008 252,771 5.3 July 2009 241,779 (4.3)
August 2007 241,207 ⎯ August 2008 253,901 5.3 August 2009 243,739 (4.0)
September 2007 240,155 ⎯ September 2008 251,904 4.9 September 2009 241,346 (4.2)
October 2007 239,604 ⎯ October 2008 250,303 4.5 October 2009 240,450 (3.9)
November 2007 240,593 ⎯ November 2008 249,903 3.9 November 2009 240,662 (3.7)
December 2007 244,487 ⎯ December 2008 252,248 3.2 December 2009 243,167 (3.6)

It is evident that the months most affected by the crisis (in terms of volume) were May,
June, and July. During the second half of 2009, traffic volume continued to decline,
though at a slower pace; and towards the end of the year, the first signs of recovery
became apparent.

Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 9
 Global Infrastructure & Project Finance

Cumulative Annual Average Daily Traffic 2008–2009

260,000
255,000
250,000
245,000
240,000
235,000
230,000

11 8
12 8
8

11 9
12 9
9
08
08
08
08
08
08
08
08

10 8

09
09
09
09
09
09
09
09

10 9
0
/0
/0
/0

0
/0
/0
/0
1/
2/
3/
4/
5/
6/
7/
8/
9/

1/
2/
3/
4/
5/
6/
7/
8/
9/
The severity of the crisis can be illustrated by the fact that in 2008, 17 out of 24 toll
roads recorded positive growth (average of 4.6%), whereas in 2009, only three of the
followed assets saw an increase in volume (average of 1.9%).

Year 2008 Year 2009

Number Total Number Total
of Roads VAR % of Roads VAR %
Roads with Traffic Growth 17 +4.6 Roads with Traffic Growth 3a +1.9
Roads with Traffic Reduction 7a (2.7) Roads with Traffic Reduction 21 (4.8)
a a
Of the seven toll roads recording a decline, only five did so Of the three toll roads recording growth, one did so because of
because of the crisis. construction projects, while another one was in its ramp-up phase.

As implied previously, commercial and tourist roads were the most affected by the
crisis, with urban roads showing less severe declines in traffic.

Traffic Performance per Purpose of Usage

Urban Commercial Tourist
Number of Roads in the Classification 9 12 3
Total Traffic Variation 2008−2009 (%) (2.3) (5.3) (7.5)
Number of Roads with Traffic Growth 2 1 0
Total Traffic Growth (%) 1.9 2.2 0.0
Number of Roads with Traffic Reduction 7 11 3
Total Traffic Reduction (%) (3.7) (6.1) (7.5)

While commercial and tourist road segments exhibited declines of 5.3% and 7.5%,
respectively, total traffic fell by only 3.6%, as urban roads represent a relatively larger
proportion of the total.
Although commercial roads are by far
the most extensive in terms of 2009 Mix
Miles AADT Weight (%)
mileage, in 2009, 68.1% of total
Urban 184.9 165,597 68.1
traffic stemmed from urban roads, as Commercial 361.4 49,363 20.3
these tend to get the most usage. Tourist 176.7 28,207 11.6
Total 723.0 243,167 100.0

10 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
 Global Infrastructure & Project Finance

Revenues
While in nominal terms total revenues of the 24 monitored toll roads increased by 0.8%
in 2009, in real terms total revenues dropped by 4.3% last year.
The difference in traffic (–3.6%) and real revenue (–4.3%) changes can be attributed to
a variety of factors, including:

• A shift in traffic composition observed for toll roads that saw a drop in commercial
vehicles as a result of the economic downturn. Commercial vehicles pay the highest
fees, with double-axle trucks paying approximately twice as much as automobiles,
and trucks with more than seven axles paying five times more, on average, than
automobiles.
• In 2009, some tranches did not adjust their tariffs 100% by inflation as authorized
by the concession granted.

Total Revenue Growth 1994–2009

(%)
20.0
15.0
10.0
15.3
5.0 10.9 11.3 8.8 8.5 9.4
7.2 7.6 6.9 6.9 1.6
0.1 3.9
0.0 (2.5) (4.3)
(5.0)
(13.2)
(10.0)
(15.0) Without Ramp-Up

(20.0) (4.2)

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

In terms of revenues, commercial and tourist road segments were again the most
vulnerable to the economic downturn.

Revenue Performance per Purpose of Usage

Urban Commercial Tourist
Number of Roads in the Classification 9 12 3
Total Revenue Variation 2008−2009 (%) (1.4) (6.5) (8.0)
Number of Roads with Revenue Growth 4 2a 1b
Total Revenue Growth (%) 3.8 3.9 7.9
Number of Roads with Revenue Reduction 5 10 2
Total Revenue Reduction (%) (3.5) (7.5) (10.9)
a
This refers to the road segments that benefited from construction projects and ramp-up. bThe concessionaire made an
extraordinary payment to authorities, obtaining, in exchange, the right to increase tariffs by a larger-than-previously-
authorized amount. In 2009, this road segment recorded a 5.9% drop in traffic.

Credit Risk
The payment ability of a structure is directly related to revenues as well as operating
and maintenance expenses, which have a first claim on revenues. Therefore, the flows
that are relevant to the structure are those that are available for debt service after
higher ranking obligations are satisfied.
Of the 16 structures rated by Fitch in 2009, six recorded a drop (in real terms) in their
cash available for debt service (CADS), with the decline ranging from –3% to –48%.
It should be noted that CADS can change not only due to fluctuations in revenues, but

Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 11
 Global Infrastructure & Project Finance

also due to changes in expenses, particularly maintenance costs. In fact, the toll roads
that registered the largest contraction in CADS also recorded high maintenance costs
during that year.
Although the decline in CADS has been quite severe in some cases, as a result of the
experience of the past 20 years, current Mexican structures have various mechanisms in
place aimed at protecting the flows from various contingencies, safeguarding to some
extent the quality of the instruments.
The following are the most commonly used mechanisms:

• Closed or “zero-flow” structures.

• Bullet payments with mandatory debt service limited to interest payments during
periods of tight liquidity.
• Partial or total capitalization of interest expense.
• Interest rate hedges for peso-denominated instruments.
• Contingency funds amounting to at least 12 months of debt service.
• Total or partial guarantees.
These features have generally been effective. In fact, even with the severe drop in
traffic and revenues experienced in 2009, rated instruments exhibited an average
coverage of 1.29x (versus 1.47x in 2008) without reserves, and 2.55x (versus 2.83x in
2008) when including contingency funds.
It should be noted that for instruments with bullet payments, coverage was calculated
taking only mandatory payments into consideration.
The fact that even under extreme difficult circumstances coverage has remained
relatively steady has led Fitch to affirm 13 of the 16 rated toll road structures in 2009,
reflecting its belief that the majority of the structures backed by toll road flows were
able to maintain their credit quality in 2009. At present, 14 of the 16 Fitch-rated
instruments have a Stable Outlook.

Conclusions
After an extremely difficult year, there are still significant challenges that the Mexican
economy will have to face in 2010. For toll roads, the primary challenge will be
recapturing the traffic lost over the past few months while at the same time adjusting
tariffs to reflect inflation. In addition, toll road operators will have to contain operating
and maintenance expenses without neglecting the physical condition of their assets.
Even though the decline in volume was much less severe than in 1995, there is concern
regarding how long it will take toll roads to recapture lost traffic given the extent of
the current global downturn, leading Fitch to believe that a complete recovery is still
far away.
The strong correlation that exists between urban toll road performance and local
economic activity suggests that traffic growth for these assets will likely be in line with
the growth expected for the Mexican economy, or 4.0% in 2010 and 3.5% in 2011.
On the other hand, commercial toll road performance will likely be more influenced by
GDP growth in the U.S. Although the economy seems to have touched bottom last year,
any recovery that might be observed is still incipient and uncertain. Fitch expects U.S.

12 Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010
 Global Infrastructure & Project Finance

GDP to increase by 2.4% in 2010 and by 2.7% in 2011, dampening potential traffic
volume growth on commercial roads.
Therefore, key questions for toll road performance remain: i) when and to what extent
will the recovery of the U.S. and Mexican economies be reflected in toll road
performance, and ii) how long will it take for operations to return to pre-crisis levels.

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Mexican Toll Roads: The Impact of the 2009 Crisis May 14, 2010 13