Moody's cuts Metronet Rail loans to B1

Moody's Investors Service said it downgraded the £510 million senior secured bank loan facilities of Metronet Rail BCV Finance plc and Metronet Rail SSL Finance plc to B1 from Ba2.

This concludes the review begun on May 8, and the outlook is negative.

The debt raised was used to finance the operation, maintenance and asset upgrade of part of the London Underground. The agency said the downgrade reflects the fact that Metronet Rail BCV and Metronet Rail SSL entered into PPP Administration on Wednesday, the increased probability of default implied by a PPP Administration given that the finance companies' source of cash flow is subject to an insolvency procedure and the uncertainty surrounding the prospects for full repayment of senior debt.

However, Moody's said the ratings also recognize the probability that in the shorter term, Metronet Rail BCV and Metronet Rail SSL may have access to sufficient cash balances to meet debt service on a timely basis, which should give time for the senior debt creditors to negotiate a financing solution with the PPP Administrators and London Underground Ltd.

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