Moody's drops Lane Cove to junk

Moody's Investors Service said it downgraded the underlying senior secured rating of Lane Cove Tunnel Finance Co. to Ba1 from Baa3 after it recorded a disappointing level of traffic flow for early 2008. The rating was placed on downgrade review in November due to concerns regarding traffic flow on the tunnel and the Falcon Street Gateway, the agency said, and potential impact on the company's credit quality.

The action does not cover the Ana wrapped rating, which is affirmed, Moody's said.

The downgrade reflects materially lower-than-forecast traffic volumes for early 2008. February's Monthly Average Daily Traffic was 62,400, and that of March was just under 59,000. These figures are well below the original base case forecasts of 2003, the agency said, and as such the ongoing debt service coverage metrics are not consistent with an investment grade rating, even after incorporating an optimistic ramp-up profile.

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