Research: Rating Action: Moody’s revises outlook to stable on Arena Luxembourg Investments Sa rl; B1 affirmed

Paris, July 06, 2022 — Moody’s Investors Service (“Moody’s”) today revised its outlook to stable from negative on Arena Luxembourg Investments Sa rl (Arena) and affirmed Arena’s B1 long-term Corporate Family Rating (CFR) and B1-PD probability of default rating. In addition, the B1 ratings of Arena Luxembourg Finance Sarl’s (Arena Finance) backed senior secured notes were affirmed and the outlook was revised to stable from negative. The company is indirectly owned by Macquarie European Infrastructure Fund 5 (MEIF5) and other minority investors and the ratings primarily reflect the credit quality of its main operating subsidiary Empark Aparcamientos y Servicios SA (Empark).


The rating affirmation with a stable outlook reflects the improved revenue and credit metric performance of the company and Moody’s expectation that Arena will be able to achieve and then maintain credit metrics in line with the current rating over the next 12 to 18 months.

Arena’s revenue increased by 18% YOY to reach EUR 161m in the year ending December 2021, and total like-for-like revenues stood around 85% of 2019 levels. The improvement was driven by easing of mobility restrictions, vaccine roll-out and strong domestic tourism, especially in Spain, that drove revenues to pre-pandemic levels during the summer months and beyond until the last two weeks of December, when the Omicron wave commenced . Furthermore, in December 2021 the company fully repaid its Revolving Credit facility (RCF) of EUR 100 million that it had fully drawn in 2020. The company’s good performance has continued into 2022. As of end-March, total revenues increased by 33% YOY and reported total like-for-like revenues reached 97% of 2019 levels.

Debt metrics have improved, in particular, Moody’s adjusted Gross Debt/EBITDA has decreased from 20.2x in 2020 to 12.8x in 2021. Further deleveraging will mainly depend on EBITDA growth as most of the debt matures only after 2026, which is expected given the continued recovery in traffic volumes and revenues.

Subject to the pace of traffic recovery, Moody´s expects that by 2023-2024 the company´s consolidated funds from operations (FFO)/debt ratio will rise to at least 8%, while Moody´s adjusted debt/EBITDA will likely fall between 7.5x-8.0x , which is considered commensurate with a B1 rating.

More generally, the B1 CFR continues to reflect (1) the long track record of operations and Arena’s well-established position as a leading car park operator in Spain and Portugal; (ii) the strategic location of Empark’s assets, which somewhat mitigates competitive threats and demand risk; (3) a significant number of long-term off-street concessions which accounted for around 90% of the group´s consolidated EBITDA in 2021 and which provides a degree of medium-term visibility for the group’s future cash flow generation; (4) a track record of cost control implemented by the management, which has relatively enabled the company to maintain a stable recurring EBITDA and (5) the positive operating track record prior to the current coronavirus crises, as evidenced by like-for-like off-street revenue growing annually at around 4% between 2017-2019.

However, the CFR remains susceptible to downside risks linked to the weaker macroeconomic environment that could delay further traffic recovery. In addition, the CFR is constrained by (1) the high financial leverage of the consolidated Arena group, with a pro-forma Moody’s-adjusted Gross debt/EBITDA expected to remain above 7.5x; (2) the execution risks inherent in the delivery of the company´s multiyear business plan; (3) the renewal risk associated with Empark’s maturing concessions and contracts; (4) the competitive and fragmented nature of the car parking sector in Iberia; and (5) Empark’s relatively small size and limited geographic diversification.


Arena´s liquidity position is adequate. As of 31 March 2022, Arena had around EUR 60 million of available cash. In addition, the company can also draw the EUR 100 million RCF that is due in 2026. Arena´s major debt maturities relate to the EUR100 million floating rate notes due in 2027 and the EUR475 million fixed rate notes due in 2028. does not face any substantial debt maturity over at least the next eighteen months and Moody´s expectations that the company will be able to cover upcoming interest expense and other obligations with its available resources.

The company is subject to one springing financial covenant, a net consolidated debt/EBITDA ratio, tested quarterly if the RCF is 40% drawn. Arena shall ensure that the ratio is no more than 12x at each calculation date. The financial covenant only acts as a drawstop to new drawings under the RCF and, if breached, does not trigger an event of default under the RCF. Given Arena repaid the RCF in full in December 2021, the drawstop condition only applies to future drawdowns. Moody’s currently anticipates that the Arena will remain compliant with the financial covenant over at least the next 12-18 months although the risk of breach may increase in case of reinstated mobility restrictions and lower than expected further demand recovery.


The B1 ratings of the backed senior secured notes issued by Arena Finance are in line with Arena’s B1 CFR. This reflects the upstream guarantees and share pledges from material subsidiaries of the group. The B1 ratings also take into account the presence of the relatively small super senior RCF ranking ahead in the event of enforcement and the pari-passu ranking with other liabilities in the structure, such as trade payables. Accordingly, Moody’s loss given default estimate for the rated notes is LGD4.


The stable outlook reflects our expectation that Arena Luxembourg will be able to achieve and then maintain a financial profile commensurate with the current rating, with FFO/debt of at least 8% and a Moody’s adjusted Debt to EBITDA ratio of no more than 8.5x. The outlook could move to positive in the scenario of a stronger than anticipated revenue recovery and sustainable improvement in the operating performance. In the future, we would consider an upgrade of the ratings if the company is able to maintain, on a sustained basis, a Moody’s adjusted Debt to EBITDA ratio below 7.5x and an FFO to Debt ratio above 10%, and sound liquidity.

Arena’s ratings could be downgraded if Arena’s Moody’s adjusted Debt to EBITDA ratio would likely remain above 8.5x and the FFO to Debt ratio below 8% over the medium term. This could result from weaker than anticipated recovery in demand for parking services. A significant deterioration of Arena’s liquidity profile would exert negative pressure on the ratings.


The principal methodology used in these ratings was Privately Managed Toll Roads Methodology published in December 2020 and available at Alternatively, please see the Rating Methodologies page on for a copy of this methodology.


Arena is the parent company of Empark, which is the largest car parking operator in the Iberian Peninsula for number of parking spaces. The group’s major geographic focus is Spain and Portugal, where it generated some 72% and 25% of Gross Margin, respectively, in the twelve months ended 31 December 2021. On the same date, Empark reported around EUR161 million of adjusted revenue and EUR64. 6 million of adjusted EBITDA.


For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found on

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Olga Kravets
Asst Vice President – Analyst
Infrastructure Finance Group
Moody’s France SAS
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Andrew Blease
Associate Managing Director
Infrastructure Finance Group
JOURNALISTS: 44 20 7772 5456
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