A13 bond hits market
The UK Highways Agency and Road Management Services (RMS) has
raised over £200 million of debt for the A13 Design Build Finance
Operate (DBFO) road in London. The project is the first urban DBFO
Project to be awarded by the Highways Agency and is of strategic
importance to London's transportation and economic infrastructure,
improving links between the City and Docklands.
The debt was raised from an MBIA wrapped, 50% reinsured Ambac bond and a European Investment Bank (EIB) loan, a structure resembling the RMS' 1996 A417 road deal.
Greenwich NatWest and Royal Bank of Scotland issued the index linked bond which was sold to UK institutional investors. It was priced at 170bp over 2.5% 2020 gilt with an initial coupon of 3.6%. Tenor is 28 years with an average life of 20 years.
The bond is priced at 5.0% plus 170bp with the overall cost of debt at 6.9.%. Bond underwriting fees are 87.5bp. Interest during the 4.5 year construction period totals £35.8 million. Availability payments are £18.5 million and bond interest is £10.1 million.
The debt is split between the £110million Ambac-wrapped bond, which includes £7million of variation bonds, £90million of EIB debt wraped by AMBAC and MBIA and shareholder equity of £24million.
The average debt service cover ratio (DSCR) is 1.28. Debt service reserve is 6 months.
A new payment mechanism is being implemented, which provides financial incentives to improve road safety. Payments to RMS under the 30 year deal will be on a present value basis about 70 percent of revenues from availability related payments, and about 30 percent of revenues from usage payments for vehicles over 5.2 m. There is an additional road safety payment plus or minus a maximum of £1.5m pa. The availability payment is £10.95 million.
The availability payments fall into five categories: A, when all five lanes are closed; B, when two of the five lanes are closed; C, when one lane of two is closed; D, when one lane of three is closed; E, when all lanes are open. There is no penalty for interruption between 12am and 6am.
There are nine measurement points along the road. There is a 100 percent deduction if all lanes are closed, a 100 percent deduction if one or more lanes are closed at peak time and subsequently deductions ranging from 20 percent to 80 percent.
Usage payments are made for vehicles 5.2 metres or over. Traffic forecasts assume traffic on the road will increase from the 1996 level of 60,000 to 100,000 vehicles in 2003. It will then gradually grow to 120,000 by 2035.
The construction contract is priced at £189.5 million. It includes a £39 million section still subject to planning and largely funded under the EIB loan.
The debt was raised from an MBIA wrapped, 50% reinsured Ambac bond and a European Investment Bank (EIB) loan, a structure resembling the RMS' 1996 A417 road deal.
Greenwich NatWest and Royal Bank of Scotland issued the index linked bond which was sold to UK institutional investors. It was priced at 170bp over 2.5% 2020 gilt with an initial coupon of 3.6%. Tenor is 28 years with an average life of 20 years.
The bond is priced at 5.0% plus 170bp with the overall cost of debt at 6.9.%. Bond underwriting fees are 87.5bp. Interest during the 4.5 year construction period totals £35.8 million. Availability payments are £18.5 million and bond interest is £10.1 million.
The debt is split between the £110million Ambac-wrapped bond, which includes £7million of variation bonds, £90million of EIB debt wraped by AMBAC and MBIA and shareholder equity of £24million.
The average debt service cover ratio (DSCR) is 1.28. Debt service reserve is 6 months.
A new payment mechanism is being implemented, which provides financial incentives to improve road safety. Payments to RMS under the 30 year deal will be on a present value basis about 70 percent of revenues from availability related payments, and about 30 percent of revenues from usage payments for vehicles over 5.2 m. There is an additional road safety payment plus or minus a maximum of £1.5m pa. The availability payment is £10.95 million.
The availability payments fall into five categories: A, when all five lanes are closed; B, when two of the five lanes are closed; C, when one lane of two is closed; D, when one lane of three is closed; E, when all lanes are open. There is no penalty for interruption between 12am and 6am.
There are nine measurement points along the road. There is a 100 percent deduction if all lanes are closed, a 100 percent deduction if one or more lanes are closed at peak time and subsequently deductions ranging from 20 percent to 80 percent.
Usage payments are made for vehicles 5.2 metres or over. Traffic forecasts assume traffic on the road will increase from the 1996 level of 60,000 to 100,000 vehicles in 2003. It will then gradually grow to 120,000 by 2035.
The construction contract is priced at £189.5 million. It includes a £39 million section still subject to planning and largely funded under the EIB loan.
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