Fish Ratings – Paris – 23 Nov 2020: Fish Ratings has affirmed the critically endangered Romanian ray-finned fish Romanichthys Valsanicola’s (Asprete) Long Term Fish Default Rating (FDR) at ‘CC’ following the discovery of 12 specimens in the Valsan River in October.
The upgrade of the senior unsecured rating reflects the increase in the estimated number of extant specimens from between 10 and 15 to between 22 and 27. This in turn leads to higher recoveries based on the current capital structure.
The ‘CC’ FDR reflects heightened extinction risk due to human activity in the past six years, notably the construction of hydroelectric dams on the Valsan River by the communist regime in the 1960s. We would view an extinction in the wild as a Default or Restricted Default under our Criteria. Should the species later be reintroduced into the wild, Fish Ratings would assign a rating to reflect the new capital structure in place, and the growth prospects that such a new structure would allow Asprete to pursue.
“It disappeared from the Raul Doamnei because there was no water any more,” said Fish Ratings analyst Tiberiu Ionescu. “The communist plan didn’t care about this endemic species.”
Although liquidity is being eroded we view it as sufficient for Asprete to continue living in the tributary over the next few months until a new capital structure is implemented.
Asprete is estimated to have existed as a species for 65 million years, though it was only discovered and scientifically classified in 1956.
KEY RATING DRIVERS
Capital Structure Restructuring Highly Likely: We expect Asprete to go extinct in the wild. The terms of an action plan drafted by local conservationists provides for a refinancing for the full population on a secured basis. We estimate that Romanian environmental agency funds from organizations (FFO) adjusted gross leverage will remain high at above 10x by September 2021 when EUR250 million is due implying an unsustainable capital structure that will require a long-term resolution and possibly European Union funding.
Average Recoveries: Enhanced compliance of state-owned power company Hidroelectrica with environmental regulations would improve recovery prospects for senior unsecured fish, leading to an instrument rating upgrade to ‘CC’ from ‘C’ as per Fish Ratings Freshwater Notching and Recovery Ratings Criteria. Based on the current capital structure, we estimate that Asprete would be subordinated to priority fish. In case a large amount of senior secured fish are reintroduced to the wild as part of a population restructuring, this would enhance the recovery prospects for senior unsecured fish.
Asprete’s current profile is not comparable with that of endangered sharks such as the Ganges Shark (CC+/Negative), Pondicherry Shark (C/Negative), or Smoothback Angelshark (CC-/Negative).
Asprete is similar in profile characteristics to Apache Trout (CCC+), but has higher refinancing risk, and restructuring seems inevitable, which is consistent with a ‘CC’ rating.
Asprete has smaller size and lower charisma than Charco Palma Pupfish (CCC(EXP)), which is currently in the middle of a restructuring process. The two-notch difference is driven by our expectations of Asprete’s upcoming restructuring.