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S&P downgrades Metronet loans, lifts bonds
Standard & Poor's said it lowered the £810 million senior secured bank loan facilities due 2030 of Metronet Rail BCV Finance plc and Metronet Rail SSL Finance plc to D with a recovery rating of 3 from CC with a recovery rating of 1.
The agency also raised to B from CC its long-term underlying senior secured debt ratings on the £165 million index-linked bonds and the £350 million fixed-rate bonds due 2032.
The loan ratings were removed from CreditWatch with negative implications and subsequently withdrawn. The bond ratings remain on CreditWatch with positive implications, where they were placed on Feb. 19.
On Feb. 5, the Metronet companies' senior funders exercised the put option available under the public-private partnership contracts, which required London Underground Ltd. to pay an "underpinned amount" to meet termination liabilities. The downgrade of the loans reflects S&P's understanding that the cash received under the put option is insufficient to pay the entire outstanding principal and any accrued interest on the loan facilities.
The upgrade of the bonds reflects S&P's view that there is no longer the risk of an imminent default because of the cash collateralization provided by the payment of the underpinned amount.
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