Moody's lowers Metronet

Moody's Investors Service said it downgraded Metronet Rail BCV Finance plc and Metronet Rail SSL Finance plc's senior secured un-guaranteed debt ratings to Ba2 from Ba1. Moody's continues its review of the ratings for further downgrade, which began May 8. The agency also affirmed the Aaa guaranteed debt ratings.

The downgrade reflects the higher default risk because committed funding is unavailable, but the agency noted that the companies' bankers could reinstate funding. On May 8, Moody's downgraded the ratings to Ba1 and placed them on review for further downgrade.

Moody's said the ratings reflect the fixed indexed revenue paid to the companies by London Underground Ltd., the challenging asset upgrade and renewal program, the company's financial profile and the likely cash requirements, the outcome uncertainties of an extraordinary review and service contract termination provisions.

Moody's said it would keep the ratings on review for downgrade pending the outcome of negotiations between Metronet, its bankers and its shareholders. The agency expects to confirm the existing ratings if the companies are allowed to draw committed funding.

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