Fitch Ratings has affirmed Aenza S.A.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB-'.
Fitch has also affirmed Aenza's USD210 million senior secured notes due 2029 at 'BB-'. The Ratings Outlook has been revised to Negative from Stable.
The Negative Outlook reflects Aenza's weak performance in 2024, with the company reporting a material reduction in the Engineering & Construction (E&C) backlog and increase in Fitch-based net leverage. Aenza faces the challenge of recovering its E&C backlog and credit metrics in 2025 to maintain its current rating category. However, ratings are supported by the cash flow visibility from mature infrastructure concessions like toll roads and a subway line, expected growth in Oil& Gas (O&G) production, and strong liquidity. Shareholders' commitment through a USD55million capital increase last December was crucial to avoiding a downgrade.
Key Rating Drivers
Deceleration in E&C Backlog: Aenza's Negative Outlook stems from a 90% decline in its E&C backlog to USD80 million in 2024, down from USD704 million in 2023, due to a slowdown in Peruvian mining activities and a selective approach to contract profitability. Fitch expects only a modest E&C backlog recovery to around USD370 million annually in 2025 and 2026, driven by expected mining activity recovery in Peru, supported by attractive copper and gold prices. Aenza's concessions will also require E&C services soon, and the company faces challenges in securing new and profitable contracts and reducing fixed costs to align with new revenue levels.
Capital Structure Temporarily Pressured: Fitch estimates Aenza will improve its capital structure, bringing net leverage to less than 2.0x as of 2025, from 4.4x in 2024, and recovering the headroom within its rating category. Last year's EBITDA was affected by cost overruns in Colombia, not expected to reappear in 2025. The agency also forecasts Aenza's O&G unit, Unna Energia, to increase its contribution to consolidated results by raising production to an average of 5,500 barrels per day (bpd), from 4,200bpd in 2024. Aenza has a call option to buy back 48.8p.p. of economic interest in tool road concession Norvial for USD32 million, which could postpone the deleveraging.
Medium-Sized & Diversified Profile: Aenza's rating reflects its medium-sized scale and and geographic and service diversification, enhancing brand recognition and reducing revenue volatility. About 50% of EBITDA comes from mature infrastructure concessions like toll roads, a subway line, and wastewater treatment plant expiring in the medium-to-long term. Aenza operates in complementary segments: O&G (30% of EBITDA), real estate (12%), and E&C (8%). It holds a strong market position in Peru, where most cash flow is generated, with branches in Chile and Colombia. Exposure to public clients is minimal, and Aenza plans to invest more in infrastructure concessions and expand into Brazil.
FCF Pressured by WCN in 2025: Aenza's Fitch-based EBITDA is projected to rise to PEN530 million in 2025 and PEN630 million in 2026, up from PEN200 million in 2024. Margins are expected to improve from 5% in 2024 to 19% in 2025 and 22% in 2026, driven by absence of cost overruns and increased oil production. FCF is expected to be negative at PEN90 million in 2025 due to high working capital needs, turning positive to PEN250 million in 2026 with working capital inflows. Fitch forecasts interest covered ratios on Aenza's standalone bond to range from 1.0x in 2025 to 2.8x in 2028.
Peer Analysis
Aenza's rating is weaker than larger contractors like Ferrovial SE (BBB/Stable) and Webuild S.p.A. (BB/Positive), which benefit from their substantially larger and global scale, conservative capital structure and moderate-to-strong liquidity. In Latin America, Aenza rating is stronger than Compania Latinoamericana de Infraestructura y Servicio (CLISA; rated CCC), which has just completed a consent solicitation to amend its 2027 notes.
Key Assumptions
Infrastructure revenue being benefited by tariff readjustments in line with inflation and recovery of the traffic;
Average oil production of 5,500 barrels per day (bpd) in 2025 and 6,300 in 2026, with in average oil prices of USD65 and USD60 per barrel, respectively;
E&C backlog of USD370 million in 2025 and USD360 million in 2026, executed on average in 1.2 years;
Annual real estate units delivered of 800 in 2025 and 900 in 2026;
Fitch-based EBITDA margins of 19% in 2025 and 22% in 2026;
Annual capex of PEN300 million in 2025 and 2026;
No dividend payment for Aenza's shareholders.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Net adjusted leverage above 3.0x, consistently;
Inability to recover the E&C backlog in terms of size and quality (i.e. profitability) of the contracts;
Weaker liquidity profile.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Stronger diversification into concessions and to other countries in Latin America;-- Net adjusted leverage below 1.5x, sustainably.
Liquidity and Debt Structure
Fitch expects Aenza to maintain strong liquidity over the next three years, supported by the recent capital increase, positive cash flow generation (CFO) from concessions, and extended debt maturity schedule. In 2024, USD188 million in readily available cash was sufficient to cover debt maturities for the next four years, with the next significant maturity being the USD210 million senior secured bond due 2029.
As of 2024, Aenza's total debt was USD432 million, after deconsolidating 81.8% of Norvial's debt as per Fitch's criteria. The debt was comprised of USD363 million (84% of the total) bonds in the capital market, USD52 million (12%) term loans and working capital lines and other debts of USD17 million (4%). Half of the group's debt is allocated at the holding level, while 41% is in infrastructure, 7% in energy, 5% in real estate, and 1% in E&C. About 50% of the total debt is in U.S. dollars and is naturally hedged. Fitch excludes the debt from Norvial's dividend monetization (also known as IASA) from the total debt calculation.
Issuer Profile
Aenza the largest engineering and infrastructure conglomerate in Peru, with presence also in Chile and Colombia. Over the past five years, infrastructure concessions have contributed the most for the company-defined EBITDA, followed by energy, real estate, and engineering & construction.
Summary of Financial Adjustments
Fitch has deconsolidated 81.8% of Norvial's results from Aenza's consolidated figures. If Aenza manages to buyback the 48.8p.p. economic interest in the subsidiary from BCI Peru, the agency will deconsolidate 33% of Norvial. Fitch also excludes IASA's debt (debt from dividend monetization). Net hedge positions on the balance sheet are added to the total debt. Fitch also excludes assets sales and impairments from the EBITDA. Linea 1 EBITDA incorporates the financial expenses, as well as the capital amortization applied to the corresponding long-term account receivable of the train acquisition.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
ESG Considerations
Aenza S.A.A. has an ESG Relevance Score of '4' for Group Structure due to its complexity, related-party transactions, and other joint operations, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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