Nordic Credit Rating (NCR) has assigned a 'AA' long-term issuer rating to Norway-based regional toll company Vegamot AS. The outlook is stable. An 'N1' short-term issuer rating was also assigned. We have assigned 'AA+' issue ratings to senior unsecured instruments that are guaranteed by Vegamot's owners.
Rating rationale
The long-term issuer rating reflects the company's strong operating environment with regulatory framework protection, low cyclicality and long-term predictability. The rating is supported by the monopoly status of toll collection in the counties of Trøndelag and Møre og Romsdal, where Vegamot provides toll financing for infrastructure projects of regional importance. The two county governments are Vegamot's strong, long-term owners and guarantors of loans it issues, which also underpins the rating. The rating incorporates Vegamot's exceptional operating efficiency and low risk appetite, which we believe are not accurately reflected by Vegamot's credit metrics.
Vegamot benefits from its owners' creditworthiness. Our long-term issuer rating on Vegamot is one notch below our 'aa+' average credit assessment of the owners due to the company's significant policy role of supporting road infrastructure. Through its financing of toll projects in Trøndelag and Møre og Romsdal, Vegamot contributes to predictable and safe infrastructure with sufficient capacity. In our view, this plays a crucial role for promoting regional development, labour accessibility, transport of goods and economic activity.
The strong creditworthiness of Vegamot's county government owners supports our 'AA+' issue rating on its guaranteed senior unsecured bonds. The issue rating reflects the irrevocable, unconditional, and timely guarantees provided by the owners.
Stable outlook
The stable outlook reflects our expectation that Vegamot's risk profile will remain strong due to the company's important role in funding public road infrastructure. It also includes our view that the industry should remain stable under its current strict regulatory framework. Moreover, the outlook factors in the company's long-term projects with low cyclicality and predictable revenues. We anticipate Vegamot will maintain exceptional margins in our forecast period through end-2027 while keeping its low-risk financial profile, despite high interest rates. Lastly, the outlook incorporates our view that the creditworthiness of Vegamot's owners will remain unchanged and that they would support the company in a stressed scenario.
We could raise the rating to reflect an improved assessment of the creditworthiness of Vegamot's owners.
We could lower the rating if changes in ownership occur, or our assessment of the owners' creditworthiness weakens. Structural changes in public road financing or toll collection, weakening Vegamot's role, could also trigger a downgrade.
| Rating list | Rating |
|---|---|
| Long-term issuer credit rating: | AA |
| Outlook: | Stable |
| Short-term issuer credit rating: | N1 |
| Senior unsecured issue rating: | AA |
| Guaranteed senior unsecured issue rating: | AA+ |
Contacts:
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Anine Gulbrandsen, analyst, +4797501657, anine.gulbrandsen@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.