This article presents the findings of ongoing research by Standard and Poor's Rating Services on the credit dynamics of the evolving road toll sector. The report updates the results of a 2002 international retrospective on toll road traffic forecasting performance.
Traffic forecasts are central to the assessment of credit risk in most toll facility findings. However, a consistent feature of toll road traffic forecasting is that figures prepared for host jurisdictions worldwide are optimistic.
The report uses 68 case studies to study predictive failure in forecasting. It aims to look behind traffic figures to uncover some of the reasons for that failure. Key ‘error drivers’, some of the principal sources of revenue risk, have been identified. Mitigation of these risks provides a basis for stronger credit quality.
The research focuses on interpretation of forecasts so that lenders can make informed decisions about future project performance and the nature and extent of associated market risk.