Texas highway P3 downgraded to ‘junk'

An operational highway P3 in the state of Texas has been hit by a downgrading from credit ratings agency Moody’s.

The agency has downgraded the rating of the winning consortium on the state’s SH 130 highway P3, the SH 130 Concession Company, to ‘junk’ status as a result of weak forecasts on traffic and revenue performance, which has caused a rapid fall in the project’s liquidity.

The downgrading also includes the project’s outstanding $686m senior bank facility and the subordinate $493m TIFIA loan.

As part of the current situation, the firm is approaching full use of its $35m liquidity facility to fund the June 2013 debt service payment.

Moody’s revised forecasts now show that almost all of the $30m of available contingent equity will be used to fund the December 2013 debt service payment, as well as part of the June 2014 debt service payment.

As a result, Moody’s claims that the project will have insufficient cash to meet the June payment requirements.

A consortium of five European banks, led by Banco Santander of Spain, provided the senior bank debt, when the project reached financial close in 2008.

The project became operational in November 2012, and saw the firm assume control of the southern-most tolled sections of SH 130, comprising 41 miles of a 90-mile bypass around the city of Austin.

Under the current terms, the deal comes with a term of 50 years, with a 20-year concession tail after the current senior debt amortizes and the flexible repayment terms of the subordinate TIFIA loan.