Moody's cuts Lane Cove

Moody's Investors Service said it downgraded the underlying senior secured rating of Lane Cove Tunnel Finance Co. to Ba3 from Ba1 after continued disappointing levels of traffic over the last few months. The rating remains on review for further possible downgrade.

The rating was downgraded April to Ba1 from Baa3 and kept on review for further downgrade after a disappointing level of traffic flow for early 2008.

The downgrade follows continued lower traffic volumes for March and April. Traffic was expected to ramp up after the bus lanes opened in March on Epping Road, which is an option from the tunnel, Moody's said. This outcome has not materialized.

Moody's said it does not currently believe that traffic volumes will increase to sufficient levels to service debt in the long term. However, Connector Motorway Group has sufficient liquidity to service all its cash calls until at least the end of 2009, the agency said, and further traffic increases will extend this period.

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