Rating action

Scope Ratings GmbH (Scope) has today affirmed the long-term issuer rating of Vegfinans AS and its financing subsidiaries ‘Vegfinans Innlandet AS’, ‘Vegfinans Viken AS’, and ‘Vegfinans Vestfold og Telemark AS’ at AA, in both local and foreign currency. Scope has also affirmed these entities’ short-term issuer ratings at S-1+ in both local and foreign currency. All Outlooks are Stable.

Moreover, Scope has affirmed the local-currency, long-term senior unsecured debt ratings of the issuances by Vegfinans Innlandet AS guaranteed by Innlandet (AAA/Stable) at AAA. The agency has also affirmed the local-currency, long-term senior unsecured debt ratings of the issuances by Vegfinans Viken AS guaranteed by Akershus (AAA/Stable) at AAA. Short-term local currency debt instrument ratings are affirmed at S-1+. All issuance ratings have stable Outlooks.

• The three outstanding S-1+/Stable-rated short-term certificates issued by Vegfinans Viken AS, guaranteed by Akershus County Municipality, have the following ISINs: NO0013685313, NO0013632430, and NO0013638031.
   
• The three outstanding S-1+/Stable-rated short-term certificates issued by Vegfinans Innlandet AS, guaranteed by Innlandet County Municipality, have the following ISINs: NO0013664649, NO0013647727, and NO0013682567.

For the accompanying rating report, please see here.

Rating rationale

The AA/Stable issuer rating for the parent company Vegfinans AS (Vegfinans) and for its financing subsidiaries ‘Vegfinans Innlandet AS’, ‘Vegfinans Viken AS’, and ‘Vegfinans Vestfold og Telemark AS’, reflects several key elements:

• Integration with the public sponsors: Vegfinans operates under a strong public mandate, with close coordination between its county shareholders and a regulatory framework that ensures predictable cash flows and strategic alignment in toll collection. Unlike commercial toll operators, it prioritises public policy goals over profit, focusing on repaying road projects within each region as tolls are collected, as reflected in significant annual depreciations. Directed by its county shareholders, the company handles project financing and toll revenue management, but not road maintenance.
   
• Control, regular support and likelihood of exceptional support: Vegfinans' role as a government-related entity (GRE) is critical for financing major toll road infrastructure and managing toll income stations, supporting regional development in line with national transportation plans. Debt related to individual projects is guaranteed by the respective owner counties, ensuring favourable financing conditions.
   
• Stand-alone fundamentals: Vegfinans demonstrates strong standalone fundamentals with a solid market position across its shareholder counties, a stable toll revenue base, high profitability, indicated by substantial EBITDA margins, and a favourable debt profile. High leverage, significant capital expenditures, and limited flexibility in adjusting toll rates independently are credit challenges inherent to the business profile.

Each financing company’s project debt issuances are guaranteed by the respective county under project guarantee frameworks, so the issuance ratings are aligned with the guarantor’s rating. This results in AAA ratings for the issuances by Vegfinans Innlandet AS guaranteed by Innlandet (AAA/Stable) and Vegfinans Viken AS guaranteed by Akershus (AAA/Stable).

Key rating drivers

The AA issuer rating reflects the robust integration of Vegfinans with the public sponsors, which underpins Scope’s adoption of its ‘top-down’ approach to the ratings.

Vegfinans is a regional toll company in southeastern Norway (AAA/Stable), jointly owned with equal shares by the county municipalities Akershus, Buskerud, Innlandet, Telemark, Vestfold, and Østfold. Vegfinans' primary function is to finance regional road projects by collecting tolls on government-owned roads. Services span the full life cycle of a project from the initial planning phase until the end of the toll collection period when financing is repaid. Road maintenance is typically handled by the Norwegian Public Roads Administration and other public entities.

The projects undertaken by Vegfinans align with long-term regional transportation plans, enhancing the entity's cash flow predictability. The company's activities are also coordinated with the Norwegian Public Roads Administration, ensuring alignment with national transportation policies. This strong government collaboration supports Vegfinans' strategic positioning in toll collection across its owning counties, underpinned by strong economic fundamentals that ensure sustainable demand for its services.

The AA rating further reflects the strong control and high financial support from the public sponsors, as well as the high likelihood of exceptional support for Vegfinans if needed.

Vegfinans holds significant strategic importance to its public sponsors due to its essential role in regional transportation infrastructure. This is a primary county responsibility, which together with education represent a majority of county operating expenditure. Its exclusive role in toll revenue collection and management, which is vital for funding key infrastructure projects, reinforces Vegfinans’ strategic importance to the counties. Large transportation projects directly impact many residents in the regions, making timely delivery and prudent budget management a priority for all levels of government. In the event of financial stress, this close alignment with essential public services increases the likelihood that the sponsoring counties would step in to ensure Vegfinans’ continued operations.

Vegfinans operates under a governance framework where its mission, strategy, as well as operational and financial activities are strongly influenced and defined by public law and resolutions from its public sponsors. This coordination ensures that Vegfinans' strategic undertakings align with national transportation goals.

Vegfinans also benefits from debt guarantees provided by county governments for the debt issuances and loans of its financing companies. These guarantees facilitate financing under favourable terms to fund extensive regional transportation projects. Additionally, state government grants have averaged 17.5% of Vegfinans' operating revenue over the past five years, enabling the organisation to support capital projects without heavily relying on toll revenue or additional debt.

Finally, the AA rating considers Vegfinans’ robust standalone fundamentals.

The rating also reflects Vegfinans’ robust standalone fundamentals, underscored by its monopoly position within its owning counties, a stable toll revenue base, and high profitability as highlighted by substantial EBITDA margins of around 95%. These strengths are constrained by high leverage, ongoing investment needs and limited flexibility in adjusting toll rates independently, challenges inherent to the business model of the regional toll operators.

The business risk profile is characterised by a strong market position within its owning counties. Vegfinans has a monopoly on toll collection within its owning counties, underpinned by strong economic fundamentals that ensure sustainable demand for its services. Vegfinans has demonstrated steady toll income growth, rising from NOK 2.46bn in 2018 to NOK 3.46bn in 2024, a 41% increase over six years. The toll income growth is driven by increased traffic volumes, strategic rate adjustments, network expansion, supportive tolling policies and efficient toll collection. Looking ahead, Vegfinans is likely to benefit from increased traffic volumes driven by economic and population growth, and urbanisation in southeastern Norway. Periodic toll rate adjustments to address inflation and maintenance costs could further support revenue growth. Given the lag in toll collection due to the structure of projects, some large projects currently under construction are expected to contribute to revenue from toll collection starting in 2028.

Vegfinans has limited flexibility in setting toll rates independently, as is the case for other toll operators in Norway, as toll rates and toll road projects are set through multi-stakeholder agreements involving local and national governments. However, the regulatory framework supports a structured approach to toll rate setting, ensuring that any changes in toll rates are consistent with long-term planning, enhancing Vegfinans' cash flow predictability. Moreover, Vegfinans can address toll rate limitations through inflation adjustments and mechanisms to align rates with the Government Proposition, particularly when discounted EV tolls reduce averages. In cases of financial strain, Vegfinans may request a 20% rate increase and/or a five-year collection extension. These measures, however, require unanimous local political approval. Overall, the rate-setting framework has proven sufficient in the past to achieve the targeted break-even levels for individual projects, demonstrating both the effectiveness of the framework and sound project management within it.

Despite some fluctuations in EBITDA, the EBITDA margin remained consistently high at 95.2% in 2024. Its increase over time, even in years of declining EBITDA, indicates Vegfinans’ focus on cost control. Unlike commercial toll operators, Vegfinans prioritises public policy goals over profit, focusing on repaying individual road projects as tolls are collected, as reflected in significant annual depreciations. Despite high EBITDA margins and strong cash flow generation, the accounting impact of writing off activated collection rights limits bottom-line profitability. Vegfinans’ annual results declined to near break-even levels in 2022 and slight losses in 2023 and 2024 (NOK -165,000 and NOK -249,898).

Vegfinans’ financial risk profile is characterised by high debt levels. Over the period from 2018 to 2024, the Debt/EBITDA ratio has ranged between 7.3 and 10.4. The increase in total liabilities during high-CAPEX years, such as 2020, 2023 and 2024, further highlights Vegfinans’ high reliance on debt to fund infrastructure projects. Vegfinans is Norway’s largest toll road company by financing volume, accounting for about 45% of the total outstanding debt among the five regional toll operators at the end of 2024. The group's total debt increased to almost NOK 36bn by end-2024, up from NOK 31bn a year earlier due to ongoing investments. The toll collection model of deferred collection results in large financing needs in the early stages of a project. Future debt is expected to rise further to fund major projects like E18 Lysaker-Ramstadsletta and the E6 Moelv-Øyer, which are backed by strong governmental support. Financing needs amount to NOK 3-5bn annually over the next few years, expected to bring the long-term liabilities up to NOK 45bn by 2028 from NOK 32bn at end-2024. However, free cash flow is projected to increase significantly, reaching around NOK 5bn in 2028, as large projects start toll collection.

Vegfinans utilises a mix of long-term amortising loans and bonds with staggered maturities through 2043 to finance infrastructure projects. To mitigate refinancing risks, Vegfinans maintains a minimum average debt maturity of four years, achieving around 7 years currently. Interest rate risks are managed by hedging over 35% of its exposure, with a fixed-rate portion reaching 43% by year-end 2024. Vegfinans effectively manages liquidity through central cash pools (Viken, Innlandet, and VoT), while new projects or infrastructure expansions require government approval, ensuring regulatory alignment. Additionally, Vegfinans benefits from access to Kommunalbanken AS, Norway's state-owned local government funding agency, which can provide favourable financing to Norwegian sub-sovereigns, including their toll companies like Vegfinans. Going forward, Scope expects bond financing to be preferred over bank loans as borrowing costs from banks including Kommunalbanken have increased. This trend is likely to continue if the current pricing advantage of bonds persists.

Finally, Vegfinans’ debt profile is supported by debt guarantees provided by the owner counties for the loans taken and bonds issued by the financing companies, ensuring favourable financing conditions for infrastructure projects. As of end-September, total agreed guarantee frameworks amount to NOK 70.5bn, while outstanding debt represents only about half of this volume. The remaining unutilised guarantees provide Vegfinans with ample financial flexibility to advance its project portfolio.

Rating-change drivers for the issuer ratings

The Stable Outlook reflects Scope’s view that risks to the ratings are balanced over the coming 12 to 18 months.

Upside scenarios for the ratings and Outlooks are (individually or collectively):

1. Improvement of the combined credit quality of public sponsors; and/or
    
2. Stronger integration with the owning counties.

Downside scenarios for the rating and Outlooks are (individually or collectively):

1. Deterioration of the combined credit quality of public sponsors;
    
2. Weaker integration with the owning counties, for instance via changes to the legal framework or the funding model; and/or
    
3. Significant and sustained deterioration of its business risk profile and/or financial risk profile.

Rating-change drivers for the issuances of Vegfinans Viken AS guaranteed by Akershus

The Stable Outlook reflects Scope’s view that risks to the ratings are balanced over the coming 12 to 18 months.

The downside scenario for the rating and/or Outlooks is:

1. If the ratings or Outlooks of Akershus County Municipality are downgraded.

Rating-change drivers for the issuances of Vegfinans Innlandet AS guaranteed by Innlandet

The Stable Outlook reflects Scope’s view that risks to the ratings are balanced over the coming 12 to 18 months.

The downside scenario for the rating and/or Outlooks is:

1. If the ratings or Outlooks of Innlandet County Municipality are downgraded.

Qualitative Scorecards (QS1, QS2)

Scope applies a top-down approach (QS1) in assessing the creditworthiness of Vegfinans. The starting point is Scope’s estimate of the average credit quality of the six county owners of Vegfinans, which is around AA+. This estimate is then potentially negatively adjusted based on the assessment of: i) control and regular support; and ii) likelihood of exceptional support (QS2). The approach also includes a supplementary analysis of the entity’s stand-alone fundamentals.

The adoption of the top-down approach (QS1) reflects the strong integration between Vegfinans and its public sponsors, the counties with ownership stakes, resulting from: i) a ‘limited’ integration assessment for legal status, ii) ‘high’ integration assessment for Vegfinans’ purpose and activities; iii) a ‘high’ integration assessment regarding its shareholder structure; and iv) a ‘high’ integration assessment on financial interdependencies.

Scope assesses control and regular government support for Vegfinans as ‘high’ (QS2) as a result of: i) the ‘high’ government control over Vegfinans’ strategic and operational decision-making; ii) the ‘high’ control over its key personnel, governing and oversight bodies; and iii) the ‘high’ evidence of financial support.

Scope assesses the likelihood of exceptional support to be ‘high’ (QS2), reflecting: i) a ‘high’ assessment for strategic importance for the public sponsor; ii) ‘medium’ substitution difficulty; and iii) ‘high’ assessment of the socio-economic, reputational and financial default implications in the event of a hypothetical default of Vegfinans.

The assessments under QS1 and QS2 result in an indicative rating of ‘AA’. The supplementary analysis of stand-alone business and financial risks has not led to an adjustment of the indicative rating, resulting in a final issuer rating of AA.

The issuer ratings for Vegfinans AS and its financing subsidiaries remain aligned, consistent with their close operational and financial interlinkages. The strong strategic importance and shared name suggest that support from the counties is likely to be extended to the financing companies.

The results were discussed and confirmed by a rating committee.

Environmental, social and governance (ESG) factors

Governance and social considerations are integral to Vegfinans’ credit quality and are incorporated into the rating through several analytical areas.

Vegfinans maintains effective governance and operates under strong oversight from county owners, aligning with public transport policies, and adhering to a clear governance framework.

Vegfinans plays a crucial role in enhancing regional connectivity and economic growth by financing roads that improve access and promote social cohesion. It actively engages with local communities to integrate their needs into project planning, showing commitment to social sustainability.

Environmentally, Vegfinans assesses and mitigates risks in its projects to ensure compliance with national regulations, underscoring its commitment to environmental stewardship and the sustainable development of infrastructure.

Rating committee
The main points discussed during the rating committee were: i) Vegfinans’ role as a regional Norwegian toll road operator and its integration with the owning counties; ii) control and regular support & likelihood of exceptional support; and iii) business and financial risk profiles.

Methodology
The methodology used for these Credit Ratings and/or Outlooks, (Government Related Entity Rating Methodology, 3 September 2025), is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity, Scope internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlooks and the principal grounds on which the Credit Ratings and Outlooks are based. Following that review, the Credit Ratings and Outlooks were not amended before being issued.

Regulatory disclosures
These Credit Ratings and Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlooks are UK-endorsed.
Lead analyst: Elena Klare, Analyst
Person responsible for approval of the Credit Ratings: Jakob Suwalski, Executive Director
The Credit Ratings/Outlooks assigned to the issuers were first released by Scope Ratings on 19 November 2024.
The Credit Ratings/Outlooks assigned to the instruments were first released by Scope Ratings on 13 January 2025.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

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