Untitled

Industry Report Card:

Investors' Appetite For InfrastructureAssets Boosts EMEA Project Finance

Primary Credit Analyst:

James Hoskins, London (44) 20-7176-3393; [email protected]

Secondary Contacts:

Watcharee Corkill, London (44) 20-7176-7020; [email protected]

Michela Bariletti, London (44) 20-7176-3804; [email protected]

Table Of Contents

Industry Ratings Outlook

Project Finance Companies Return To The Capital Markets

The Existing Portfolio Maintains Stable Credit Quality

Rating/Outlook Distribution

Social Infrastructure In Particular Looks Set For A Resurgence

Issuer Review

Recent Rating Activity

Contact Information

Related Criteria And Research

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT NOVEMBER 13, 2013 1

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Industry Report Card:

Investors' Appetite For Infrastructure AssetsBoosts EMEA Project Finance

Industry Ratings Outlook

Project finance bond issuance is surging in Europe, the Middle East, and Africa (EMEA) in 2013 as infrastructure

programs look to the capital markets to supplement and/or replace traditional bank financing, which is being curtailed

by tighter regulation in the region. What's more, issuers are adopting a number of different funding structures, leading

to varying rating outcomes.

In Standard & Poor's Ratings Services' view, these competing structures serve to diversify the industry because capital

market issuance is no longer reliant on a single funding structure. As a result, we look to a more buoyant period for the

industry and anticipate stable creditworthiness while this new wave of issuance unfolds.

Since our last report card, "Industry Report Card: New Finance Structures Set To Spur A Revival Of Debt Issuance In

The Project Finance Industry," published on May 29, 2013, on RatingsDirect), we've assigned a number of preliminary

ratings to new projects that have construction risk. These are the first new project finance bonds with construction risk

issued in EMEA since 2007, and demonstrate investors' returning appetite for infrastructure assets.

Overview

• EMEA project finance issuance has soared this year because of curtailed bank lending and increased appetite

for infrastructure assets.

• In the six months to Sept. 30, 2013, the credit quality of our rated portfolio of project finance assets

deteriorated slightly, with the proportion of investment-grade projects falling to 70% from 78%. Even so, we

view the credit outlook for the sector as stable.

• New transaction structures offer issuers a wider array of funding options and increasing competition.

• Social infrastructure projects, such as schools and hospitals, will likely be the main beneficiaries of the new

wave of issuance.

• The benefits felt by project finance companies should in our view ensure stable creditworthiness for the

industry into 2014.

Project Finance Companies Return To The Capital Markets

After a long hiatus, project finance companies in EMEA have this year issued a significant amount of new capital

market debt. A number of the transaction structures adopted have been proven viable from a funding perspective. This

is important for the market's resilience and competitiveness because it provides project sponsors with a number of

different avenues to access the capital markets. By contrast, when project finance capital market issuance last peaked,


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in 2007, U.K PFIs were almost totally reliant on monoline guaranteed debt and there was little issuance outside of the

U.K. and only a small number of large projects in the Middle East. The only alternative to monoline guaranteed debt

was secured bank lending.

In the reporting period, we have assigned new ratings to two accommodation projects that benefit from monoline

guarantees. These projects-- Holyrood Student Accommodation Plc and Sustainable Communities for Leeds (Finance)

PLC--are both guaranteed by Assured Guaranty (Europe) Ltd.; currently the only monoline guarantor active in the U.K.

market. In the same period, two new student accommodation projects were financed using bonds that do not benefit

from a guarantee from a monoline, which we rate at 'A-/Stable'. These projects (ULiving@Hertfordshire and UPP

Bond 1 Issuer PLC) are the first unwrapped project finance bonds issued to fund social infrastructure in the U.K.

Furthermore, Ruwais Power Co.'s $800 million bond issuance signaled the return of the Middle Eastern market for

project bonds. This year also saw Watercraft Capital S.A. issue the first bond through the European Investment Bank's

(EIB's) Project Bond Credit Enhancement initiative. (For more details of the various features of these transactions, see

"How To Unlock Long-Term Investment In EMEA Infrastructure," published Oct. 4, 2013, and "University Student

Accommodation Projects Are Satisfying Investor Appetite For Long-Term Infrastructure Debt," published July 30,

2013.

A number of proposed structures are still being developed. These include the U.K. government's Guarantee Scheme

and the U.K. Education Funding Authority's public sector borrowing aggregator. A number of European countries such

as Italy, have implemented legislative changes to attract institutional investors. We have yet to rate any debt issuances

using these structures.

We also recently rated the first project finance transaction in the Republic of Slovakia (GRANVIA a.s.) at '(prelim)

BBB+/Stable'. GRANVIA issued the debt to refinance the senior bank loans it drew to finance construction works on

the R1 motorway in South West Slovakia.

The Existing Portfolio Maintains Stable Credit Quality

We have taken a number of rating actions in the past two quarters, the most notable of which are outlined below.

Three entities became "fallen angels", that is, we downgraded them to speculative grade ('BB+' and lower) from

investment grade ('BBB-' and higher). We lowered our long-term issue ratings on Healthcare Support (Newcastle)

Finance PLC to 'BB+' from 'BBB-' and assigned it a stable outlook. The downgrade followed the issue of a second

warning notice by the Newcastle-Upon-Tyne Hospitals National Health Service (NHS) Foundation Trust as a result of

disputed penalty points issued in relation to the angiography room at the Royal Victoria Hospital.

We downgraded Spanish toll-road project operator Autovia del Camino S.A. to 'BB+' from 'BBB-' on weaker traffic

growth prospects.

Finally, we lowered the long-term issue ratings on Norway-based asset company Njord Gas Infrastructure AS (NGI) to

'BB' from 'BBB+' following the announcement by the Norwegian Ministry of Petroleum & Energy (MPE) on June 27,

2013, that it would amend transport tariffs on the majority of future capacity bookings for the Gassled network. As a


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Industry Report Card: Investors' Appetite For Infrastructure Assets Boosts EMEA Project Finance

result of the announcement by MPE, we also took a negative rating action on the bonds issued by Solveig Gas Norway

AS (Solveig), lowering our ratings on the entity to 'BBB-' from 'BBB+' and assigning it a negative outlook.

On the flip side, we raised the issue ratings on Alpha Schools (Highland) Project PLC to 'BBB+' from 'BBB' and

assigned them a positive outlook. This followed an improvement in the working relationships between the transaction

parties, as well as in the project's operational performance over the six months prior. We also raised our ratings on

Consort Healthcare (Mid Yorkshire) Funding PLC to 'BBB/Stable' from 'BBB-/Positive' following its recent, more

robust operating performance. In addition, we raised the long-term issue ratings on Ajman Sewerage (Private) Co. Ltd.

to 'BB+' from 'BB' to reflect its stronger financial profile.

Table 1

Financial Statistics Of The Rated European Project Finance Portfolio -- Education

--Ratings-- --Reserves-- --Financial profile--

SPUR Outlook

Long-term

rating

Debt

service

support Other reserves

Leverage

(senior

debt/total

capital)

Current

average/min.

DSCR:

ProjectCo's

Current

average/min.

DSCR: S&P's

Default

covenant

Distribution

test

Alpha

Schools

(Highland)

Project PLC

BBB+ Positive BBB+/

Positive

6

months

DSRA

Lifecycle: 3 years

(100%/50%/25%);CIL

90% 1.31x/1.26x 1.28x/1.24x 1.05x 1.15x

Catalyst

Higher

Education

(Sheffield)

BBB Negative AA-/Stable 6

months

DSRA

MRA 3 years; working capital

reserve

89% 1.44x/1.16x 1.37x/1.15x 1.05 1.13

Discovery

Education

PLC

BBB STABLE BBB/Stable 6

months

DSRA

Lifecycle: 3 years (100%, 66%,

33%);CIL

91% 1.23x/1.14x 1.21x/1.13x 1.05x 1.15x

InspirED

Education

(South

Lanarkshire)

PLC

BBB- Stable BBB-/Stable 6

months

DSRA

Lifecycle: 3 years (100%, 66%,

33%);CIL: £9 mil. funded in 2009

92% 1.24x/1.16x 1.20x/1.11x

(0.99x exc

CiLF)

1.05x 1.10x

Transform

Schools

(North

Lanarkshire)

Funding PLC

BBB Stable BBB/Stable 6

months

DSRA

MMR:

100%/83%/67%/50%/33%/17%

of each six-month period of

lifecycle costs.;CIL £2 mil.

90% 1.20x/1.16x 1.18x/1.13x 1.05x 1.125x

DSCR--Debt service coverage reserve. DSR--Debt service reserve. EIB--European Investment Bank. SPUR--Standard & Poor's Underlying Rating. SPV--Special purpose

vehicle. RCF--Revolving credit facility. NOK--Norwegian krone. N/A--Not applicable. NR--Not rated.

Table 2

Financial Statistics Of The Rated European Project Finance Portfolio -- Housing


SPUR Outlook

Long-term

rating

Debt

service


Leverage

(senior

debt/total

capital)

Current

average/min.

DSCR:

ProjectCo's

Current

average/min.

DSCR: S&P's

Default

covenant

Distribution

test

Exchequer Partnership

(no. 2) PLC

A- Stable AA-/Stable 6 months

DSRA

prefunded

Lifecycle: 3 years

(100%/66.6%/33.3%)

CIL:£3 mil. (indexed)

90% 1.45x/1.18x 1.41x/1.17x 1.05x 1.10x


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Table 2

Financial Statistics Of The Rated European Project Finance Portfolio -- Housing (cont.)

Integrated

Accommodation

Services PLC

A Stable AA-/Stable 6 months

DSRA

prefunded

Lifecycle: 3 years; CIL: £8

mil.

90% 1.36x/1.20x 1.32x/1.18x 1.05x 1.15x

Keele Residential

Funding

A- Positive AA-/Stable 6 months MRA none at Acceptable

Uni. Rating, otherwise

5-year forward-looking; £2

mil. deferred premium rev.;

£1.1 mil. stamp-duty rev.

98% 1.66x/1.43x 1.60x/1.36x N/A No payment

block event

oustanding;

less than

90% of

student rents

achieved

RMPA Service PLC BBB- Stable BBB-/Stable 9 months

DSRA

Lifecycle: 3 years

(100%/50%/25%); CIL

91% 1.24x/1.14x 1.24x/1.11x 1.05x 1.12x

Services Support

(Manchester) Ltd.

BBB- Stable BBB-/Stable 6 months

DSRA

Lifecycle: 2-year

forward-looking

93% 1.29x/1.11x 1.26x/1.10x 1.05x N/A

Aspire Defence

Finance PLC

BBB+ Positive BBB+/Positive 6 months

DSRA

MRA:

100%,66%33%;LRA-£35mil.;

IRA-£20 mil.; SPV cost

reserve account-£10 mil.

92% 1.38x/1.33x 1.35x/1.31x 1.05x 1.12x (for

years 1 to 8)

UPP Bond 1 Issuer A- Stable A-/Stable 6 months 3-year forward looking

sinking fund (100%, 66%,

and 33%)

77% 1.76x/1.32x 1.49x/1.28x 1.05x 1.15x

Holyrood Student

Accommodation PLC

BBB Stable AA-/Stable 6 months 3-year forward-looking

100%, 66%, and 33%

82% 1.43x/1.26x 1.39x/1.22x From Aug.

31, 2017, to

Feb. 29,

2020, less

than 1.90x;

from March

1, 2020, to

Aug. 31,

2023, less

than 1.23x;

from Sept. 1,

2023, to Aug.

31, 2039, less

than 1.25x; at

any time

from Sept. 1,

2039, less

than 1.30x

Sustainable

Communities for

Leeds (Finance) PLC

BBB- Stable AA-/Stable 6 months 3-year forward-looking

100/66/33

89% 1.25x/1.24x 1.24x/1.23x 1.10x 1.15x

Uliving@Hertfordshire A- Stable A-/Stable 6 months 3-year forward looking

sinking fund

75% 1.79x/1.66x 1.79x/1.64x 1.10x 1.15x

DSCR--Debt service coverage reserve. DSR--Debt service reserve. EIB--European Investment Bank. SPUR--Standard & Poor's Underlying Rating. SPV--Special purpose vehicle.

RCF--Revolving credit facility. NOK--Norwegian krone. N/A--Not applicable. NR--Not rated.

Table 3

Financial Statistics of the Rated European Project Finance Portfolio -- Healthcare


SPUR Outlook

Long-term

Rating

Debt service


Leverage

(senior

debt/total

capital)

Current

average/min

DSCR:

ProjectCo's

Current

average/min

DSCR: S&P's

Default

covenant

Distribution

test

Catalyst

Healthcare

(Romford)

Financing PLC

BBB- Stable AA-/Stable 6 months

DSRA

Lifecycle:3 yrs

(100%/67%/33%);CIL

92% 1.29x/1.23x 1.24x/1.19x 1.05x 1.15x


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Table 3

Financial Statistics of the Rated European Project Finance Portfolio -- Healthcare (cont.)

Central

Nottinghamshire

Hospitals PLC

BBB Stable AA-/Stable 6 mths DSRA Lifecycle:3 years

(100%, 66%,

33%);CIL:Prefunded

60% of construction

completion;MRA :

100%/66%/33%

91% 1.22x/1.16x 1.18x/1.16x 1.05x 1.125x

Consort

Healthcare

(Birmingham)

Funding PLC

BBB- Stable BBB-/Stable 6 mths DSRA MRA: 100/66/33 92% 1.23x/1.20 x 1.19x/1.13x 1.05x 1.12x

Coventry &

Rugby Hospital

Co

BB+ Stable BB+/Stable 6 months

prefunded

Lifecycle:3 years

(100%/25%/25%);

CIL

91% 1.21x/1.15x 1.12x/1.05x 1.05x 1.15x

Healthcare

Support

(Newcastle)

Finance PLC

BB+ Stable BB+/Stable 6

months,funded

from

subdebt,drawn

down March

2010

Lifecycle Reserves:3

years

(100%/66%/33%);

CIL

93% 1.26x/1.19x 1.21x/1.16x 1.05x 1.15x

Octagon

Healthcare

Funding PLC

BB+ Stable AA-/Stable 6 months

DSRA

Lifecycle: 3 years

(100%, 66%, 33%)

90% 1.44x/1.15x 1.36x/1.06(Inc.

All reserving):

1.36x/1.04x

(incl.

contractual

reserving only)

1.05x 1.12x

The Walsall

Hospital

Company PLC

BBB Stable AA-/Stable 6 mths DSRA Lifecycle:3 years

(100%, 66%,

33%);MRA:

100/66/33;Cil

90% 1.22x/1.20x 1.17x/1.15x 1.05x 1.12x

By Chelmer PLC

|GLBP|

BBB- Stable BBB-/ Stable 6 mths DSRA Lifecycle:3 years

(100%/50%/25%

);CIL:50%of

ProjectCo's max

liability;MRA:

100/50/25

90% 1.23x/1.14x 1.20x/1.10x 1.05x 1.125x

The Hospital

Co. (Swindon &

Marlborough)

Ltd |GLBP|

BBB+ Stable BBB+/Stable 6 months

DSRA

Lifecycle:3 years

(100%, 67%, 33%)

90% 1.32x / 1.15x

(Dec-2012)

1.28x/1.14x

(Dec-2012)

1.05x 1.10x

Catalyst

Healthcare

(Manchester)

Financing PLC

BB+ Positive BB+/Positive 6 mths DSRA MRA:

100%/66%/33%;

CIL:£1 mill rising to

50% of total liability

on completion

89% 1.29x/1.20x 1.24x/1.15x 1.05x 1.15x

DSCR--Debt service coverage reserve. DSR--Debt service reserve. EIB--European Investment Bank. SPUR--Standard & Poor's Underlying Rating. SPV--Special purpose

vehicle. RCF--Revolving credit facility. NOK--Norwegian krone. N/A--Not applicable. NR--Not rated.


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Table 4

Financial Statistics of the Rated European Project Finance Portfolio -- Transport


SPUR Outlook Long-term rating

Debt

service


Leverage

(senior

debt/total

capital)

Current

average/min

DSCR:ProjectCo's

Current

average/min

DSCR:S&P's

Default

covenant

Distribution

test

AUMANCHA B Stable AA-/Stable 12

months

3 year

forward-looking

MRA:; (Min trapped

extra cash of c. €6.7

mil. claw-back cash

rev.

80%

(debt/equity)

1.75x/1.47x 1.57x/1.38x N/A 1.1x

Amey Lagan

Roads

Financial

BB Stable BB/Stable 6 months 3-year

forward-looking

MRA;7.5% LC & 3%

retention bond;

86%

(debt/equity)

1.22x/1.08x 1.17x/1.06 1.05x 1.125x DSCR

Autolink M6 BBB- Stable AA-/Stable 6 months 1-year

forward-looking (Sr.)

MRA

N/A 1.87x/1.23x 1.81x/0.9x N/A N/A

Autovia del

Camino

BB+ Stable BB+/Stable 12

months

58% of revenue

cashed in directly in

a special account for

sr debt service

N/A 1.41x/1.12x 1.38x/1.09x N/A DSCR

<=1.2x,LLCR

<1.25x

County

Route (A130)

B+ Negative B+/Neg(

Sr.);B-/C,W.Neg(Sub)

6 months 4-year

forward-looking MRA

N/A 1.18x/0.98x 1.03x/0.70x N/A 1.15x

DirectRoute

(Limerick)

BB- Negative BB-/Neg 6 months Guaranteed a min

traffic level (although

before price is

known), €3 mil. CIL

N/A 1.18/1.09x 1.12x/1.03x N/A 1.12x

Highway

Management

M1

BBB Stable AA-/Stable 6 months 3 year

forward-looking MRA

87%

(debt/equity)

1.32x/1.17x 1.25x/1.11x N/A 1.125x

Ostregion B+ Neg B+/Neg 6 months MRA 18 months

;100%/60%/30%;Gtd

revenue to keep

DSCR at least 1.05x.

88% < 1.05x in several

periods

1.07x/1.01x N/A 1.125x, 1.15x

in the later

stages

Road

Management

Consolidated

B Stable B/Stable 12

months (6

month

cash

funded

and

remaining

6 months

by LOC)

5-year

forward-looking

MRA; Cash of

£50.7m (as of June

2010) plus £11.3 in

L/Ds.

N/A consd.1.15x/1.11x

-

A1(M):1.11x/1.06x

, A419:1.24x/1.16x

consd.1.10x/1.04x

-

A1(M):1.06x/1.00x

,

A419:1.22x/1.06x

N/A 1.2x

Verdun

Participation

BBB- Stable A1 and B1:

BBB-/Stable; A2 and

B2: AA-/Stable

12

months

5-year

forward-looking MRA

89%

(debt/equity)

1.45x/1.22x (2045) 1.36x/1.18x (2045) 1.05x 1.35x in

initial

10y,1.17x

thereafter

High Speed

Rail Finance

1 PLC

A- Stable A-/stable 12

months

N/A Leveraged

structure in

the region of

80/20

1.65x/1.49x 1.48x/1.37x 1.05x N/A

DSCR--Debt service coverage reserve. DSR--Debt service reserve. EIB--European Investment Bank. SPUR--Standard & Poor's Underlying Rating. SPV--Special purpose vehicle.

RCF--Revolving credit facility. NOK--Norwegian krone. N/A--Not applicable. NR--Not rated.


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Table 5

Financial Statistics of the Rated European Project Finance Portfolio -- Utilities


SPUR Outlook

Long-term

rating

Debt service

support

Other

reserves

Leverage

(senior

debt/total

capital)

Current

average/min

DSCR:

ProjectCo's

Current

average/min

DSCR: S&P's

Default

covenant

Distribution

test

Alte Liebe 1

Limited

B- Stable B-/Stable 12 months of

interest at the

SPV

Fixed DSCR

covering first

year of DS

(increasing

coverage

above 12

months

overtime) +

1-year O&M

reserve

account

N/A N/A Above 1.05x N/A 1.25x lock-up

Breeze

Finance S.A.

(Breeze

Three)

B Stable B/Stable

(senior);

C/Stable

(junior)

6 months for

senior tranche

and 3 months

for junior

tranche (fully

used)

Additional

reserves will

be funded

over time

N/A N/A Class

(A):1.44x/1.07x;

Class (B):

1.08x/0.80x

N/A 1.2x senior,

1.15x junior

CRC Breeze

Finance S.A.

(Breeze Two)

B- Stable B-/Stable

(senior);

C/Stable(junior)

6mths for

senior tranche

(74.6% used),

3mths for junior

tranche (fully

used)

Additional

reserves will

be funded

over time

N/A N/A Class

(A):1.40x/1.14x;

Class (B):

1.10x/0.90x

N/A 1.2x senior,

1.15xjunior

Ajman

Sewerage

Co. Ltd.

BB+ Stable BB+/Stable 12 months DSR N/A N/A 1.40x Above 1.8x

from 2014

1.05x 1.40x

Belfast Gas

Transmission

Financing

PLC

A Stable AA-/Stable 6 months

interest and

principal

forward-looking

MRA: None;

£4 mil.

guarantor

operating

account (cash

buffer), £5.2

m standby

liquidity

facility

100% debt 2x 1x 1.2x No distributions

allowed

Njord Gas

IFR

BB Stable BB/Stable 12 months

interest only

(amortization of

the bond may

be deferred for

18months)

MRA: none;

NOK 250mil.

RCF (with

refinancing

risk, but

adequately

mitigated)

66% (rising

to about

80%)

1.23x/0.84x None 1.2x

forward-looking

DSCR

Premier

Transmission

Financing

PLC

A Stable AA-/Stable 6 months MRA: £1.8

million

(adjusted for

future

maintenance)

100% debt 2x 1x 1.25x No distributions

allowed.

Ras Laffan

Liquefied

Natural Gas

Co. Ltd. (3)

A Stable A/stable N/A N/A N/A 12.3x ('13) ,

4.4x ('14)and

13.3x('15)

12.3x ('13) , 4.1x

('14)and

12.4x('15)

N/A N/A

Ras Laffan

Liquefied

Natural Gas

Co. Ltd. (II)

A Stable A/stable N/A N/A N/A N/A Above 5.5x until

2013 and 4.2x

in 2014

N/A N/A


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Table 5

Financial Statistics of the Rated European Project Finance Portfolio -- Utilities (cont.)

Solveig BBB- Negative BBB-/Negative 6 months N/A 75% debt 2.63x 1.26/1.11x 1.40x 1.20x DSR

Ruwais

Power Co.

PJSC

(Shuweihat

2)

A- Stable A-/Stable 6 months After the

fixed-price

operating

period, a

funded MRA

is required

dependent on

future cost

forecasting

80% 1.21x/1.20x 1.20x/1.18x 1.05

DSCR

1.10 DSCR

Watercraft

Capital S.A.

BBB Negative BBB/Negative Next

semi-annual

debt service.

Partially funded

at issuance.

Rest covered by

letter of credit

1-year

forward

looking

sinking fund

81% 1.31x/1.31x 1.30x/1.30x 1.05

DSCR

1.20x DSCR

DSCR--Debt service coverage reserve. DSR--Debt service reserve. EIB--European Investment Bank. SPUR--Standard & Poor's Underlying Rating. SPV--Special

purpose vehicle. RCF--Revolving credit facility. NOK--Norwegian krone. N/A--Not applicable. NR--Not rated.

Rating/Outlook Distribution

Of the 110 project finance issues that we rate, 75% were investment grade on Sept. 30, 2013 (see chart 1), compared

with 80% on March 31, 2013. Since the end of the first quarter of 2013, the proportion of investment-grade rated issues

in the portfolio has decreased by approximately 4%. In the six months to Sept. 30, 2013, we added five new project

finance companies to our rated portfolio. We assigned new issue ratings to Holyrood Student Accommodation Plc,

Ruwais Power Co. PJSC (Shuweihat 2), Watercraft Capital S.A., Sustainable Communities for Leeds (Finance) PLC,

and ULiving@Hertfordshire (see table 7). We also withdrew our rating on Northland Resources A.B. at the issuer's

request, following a default.


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Chart 1

The creditworthiness of 70% of projects reflected by their Standard & Poor's Underlying Ratings (SPURs) as of Sept.

30, 2013, was investment-grade (see chart 2)--lower than the 78% recorded on March 31, 2013. To us, this indicates a

slight deterioration in the credit quality of our rated portfolio of EMEA project finance assets. The bulk of the

downgrades related to the change in the tariff regime on the Gassled network and does not, in our view, reflect any

overall trend for the portfolio as a whole.


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Chart 2

We raised four issue ratings related to three projects in the six months to Sept. 30, 2013, compared with six issues in

the previous six months. However, we also lowered the ratings on nine issues, four of which related to the debt issued

by Njord Gas Infrastructure AS. This compares with seven downgrades in the previous six months (see chart 3).


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Chart 3

In terms of rating distribution, as of Sept. 30, 2013, 8% of the portfolio (about nine issuers) had a negative outlook. At

the same date, 85% had a stable outlook, a marked improvement from the 73% at the end of March 2013. On the other

hand, we had a positive outlook on six issues at the end of the third quarter of 2013, down from 11 issues at the end of

March 2013 (see chart 4).


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Chart 4

Since our last report card, there are fewer SPURs with negative outlooks Seven issues (less than 10%) had a negative

outlook on Sept. 30, 2013, compared with nine issues (about 10%) on March 31, 2013. At the same time, 81 issues

(84%) retained a stable outlook at the end of September 2013, compared with 68 issues (53%) at the end of March

2013 (see chart 5).


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Chart 5

Social Infrastructure In Particular Looks Set For A Resurgence

Thanks to a number of government and non-government initiatives reviving investor appetite for infrastructure debt,

we believe the project finance sector will enjoy a buoyant 2014. Social infrastructure will likely take center stage, with

schools and hospitals, and other assets such as transportation and renewable energy projects, being more readily

financed with capital market debt. As a result, our outlook on the industry for the rest of the year is stable.

Issuer Review

Table 6

Issuer Review

Company Rating* Country Analyst Comments

Catalyst Higher Education

(Sheffield) PLC

AA-(Insured)/Stable,

BBB(SPUR)/Negative

U.K. James

Hoskins

The project has continued to deliver strong operational

performance. It has incurred limited deductions and

maintained strong relationships. Positively, Sheffield

University reported strong applications for places for the

2013/2014 academic year and occupancy for the

academic year is above 99%.


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Table 6

Issuer Review (cont.)

Exchequer Partnership (No.

2) PLC

AA-/Stable,

A-(Spur)/Stable

U.K. Mike

Wilkins

The project, covering the refurbishment of government

offices in Whitehall, London, has maintained a stable

operating performance since 2004. There have been

minimal financial deductions applied to the hard and soft

facilities management (FM) service providers, neither of

which are considered material for the rating. More

variations are expected in the coming years due to

increased occupancy levels as a part of the government's

strategy to increase efficiency and generate savings in its

estates. Positively, these have been handled well until

now with no adverse impact on the operations or on

relations. Our base-case forward looking annual debt

service coverage ratio (ADSCR) was 1.19x minimum

occurring in June 2013, with a 1.48x average, as per the

June 2013 model.

Integrated Accommodation

Services PLC

AA-/stable(Insured),

A(Spur)/Stable

U.K. Mike

Wilkins

The project, which finances new accommodation

facilities at the U.K. Government Communications

Headquarters, continues to deliver a stable operating

performance with minimal availability and performance

deductions. Outstanding operational issues related to a

failure in the chilled water system and power losses have

been rectified with no impact to ProjectCo. The

humidification issues affecting the building have led to

some minor deductions, which have been passed through

to the FM contractor G4S. We believe that the risk

associated with latent defects due to the expiry of the

10-year latent defect insurance earlier this year is

mitigated to a large degree by regular building surveys

and extra testing at full capacity to stress the condition of

the building. Based on the March 2013 financial model,

our contractual minimum ADSCR is 1.18x occurring in

March 2014, with an average at 1.42x.

Keele Residential Funding

PLC

AA-(Insured)/stable,

A-(spur)/Positive

U.K. Mike

Wilkins

The project continues to perform strongly thanks to the

support of Keele University and a robust contractual

foundation. The university has come up with a revised

proposal for the Hawthorn site, which will be used to

construct new houses, the sales proceeds of which the

university will use to construct 453 rooms in two blocks.

Though we had expressed some concern over a potential

decline in international student applications given the

tightening of the U.K. visa policies, the university sees

steady and robust student applications. We expect this

trend to continue in 2014 as well, given the high number

of students that the university attracts for its business

school courses. Financial performance continues to be

strong with contractual ADCSRs of 1.49x minimum and

1.68x average (average of 1.62x without interest income).

Services Support

(Manchester) Ltd.

BBB-/Stable U.K. Mike

Wilkins

The project has continued to perform in line with

expectations with minimal deductions and stable

operations. Relations with concession grantor Greater

Manchester Police Authority remain good, despite

increasing pressure on the authority to implement cost

savings as part of a restructuring program. This program

along with the findings of the Deloitte strategic review

could lead to some operational challenges in the future,

including increased capital and maintenance works over

the next two years. The lifecycle underspend will

continue to be monitored. The TA, however, regards the

lifecycle provisions as adequate considering the current

condition of the buildings. The financial profile remains

aggressive but adequate liquidity is provided through

fully funded reserve accounts. As per the September 2012

model, the ADSCR is 1.29x average and 1.14x minimum,

and 1.13x minimum without interest income.


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Table 6


UPP Bond 1 Issuer PLC A-/Stable U.K. Mike

Wilkins

To date, the project has operated in line with our

forecasts, with occupancy at, or close to, 100% at all

participating companies, and minimal performance or

availability deductions. Rental indexation for the

2013-2014 academic year has been higher than

previously modeled with the exception of Broadgate Park

at the University of Nottingham, where rent discounts of

between 5%-10% have been offered to returning students

(2nd and 3rd year students) to improve occupancy. That

said, the impact of the discounts on the rental income

received from the overall portfolio has been negligible,

with the forecast ADSCR for 2013/2014 declining slightly

to 1.31x, from 1.32x as previously modeled.

Holyrood Student

Accommodation Plc

AA-(insured)/Stable,

BBB(SPUR)/Stable

U.K. Mike

Wilkins

The final rating was assigned in July after financial close.

The project is in the process of developing

accommodation for postgraduate students in Edinburgh

and we expect construction works to be completed to

specification, on time and within budget with the first

stage (Holyrood South Hall) forecast to be delivered by

September 2014.

ULiving@Hertfordshire A-/Stable U.K. Mike

Wilkins

In May 2013, ULiving@Hertfordshire PLC (ULiving)

issued £143.5 million of senior secured bonds due July

31, 2054 to finance the development, maintenance, and

operation of student accommodation at the College Lane

Campus of the University of Hertfordshire (UoH). The

bonds will be repaid from rental income on student

accommodation. To date, construction works are

reported to have been carried out smoothly. Phase I is on

course to be completed in time for the next academic

year in Sept. 2014- in line with our expectations and the

construction programme. Rental income is guaranteed by

UoH during the construction period, which provides

greater stability during the construction and start-up

periods.

Sustainable Communities

for Leeds (Finance) PLC

AA-/Stable,

BBB-(SPUR)/Stable

U.K. Manuel

Dusina

The project involves the construction, refurbishment, and

maintenance of approximately 1,700 social housing

dwellings in Leeds under a 20-year project agreement

with Leeds City Council. The recently assigned issue

rating reflects our view of the weak creditworthiness of

the construction contractor, Keepmoat Ltd. However, this

is offset to some extent by the strong security package

available to ProjectCo during construction. The credit

quality of the construction contractor is the main

constraint.

Defence

Aspire Defence Finance

PLC

BBB+/Positive(insured),

BBB+(SPUR)/Positive

U.K. James

Hoskins

Good progress continues to be made on the competed

price works with no material issues or delays reported. In

our opinion, interim services are being executed

successfully with negligible deductions, which, in any

case, have been passed through to the relevant

subcontractors in full. Aspire continues to progress

investigations and remedial works in relation to a number

of heating and hot water failures that occurred over the

last few years and continues to make progress in reaching

commercial settlements with its insurers. Aspire Defence

Finance continues to maintain a strong relationship with

the Ministry of Defence and financial performance

remains in line with expectations.


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Table 6


RMPA Services PLC BBB-(insured)/Stable;

BBB-(SPUR)/Stable

U.K. James

Hoskins

The project has continued to deliver strong operational

performance with minimal deductions. The technical

advisor (TA) continues to note that life-cycle works are

being well delivered, slightly under budget, and that the

buildings are in very good condition. Despite a number of

meetings during the latter part of 2012, we understand

that there has not yet been any agreement with the Her

Majesty's Royal Customs on the project's tax liabilities.

Positively, the financial model includes the currently

agreed tax liabilities without taking into account any

reduction that RMPA is seeking.

Education

Alpha Schools (Highland)

Project PLC

BBB+ (insured)/Positive,

BBB+(SPUR)/Positive

U.K. Manuel

Dusina

The project, to build and maintain 11 new schools in the

Scottish Highlands, continues to deliver a relatively stable

operational performance with a low level of performance

deductions reported. As the facilities have only a limited

operating history since the completion of construction,

some "teething issues" have been reported as operational

services stabilize to a steady state delivery while planned

life cycle works have been relatively minor to date.

Financial performance for the year to Jan. 31, 2012 was

ahead of budget and reported cash balances are healthy.

Recently upgraded following the resolution of most of the

outstanding issues that had been causing friction between

the various transaction parties. Consequently, the

working relationships between the transaction parties, as

well as the project's operational performance, have

improved over the past six months.

Discovery Education PLC BBB (insured)/Stable,

BBB(SPUR)/Stable

U.K. James

Hoskins

The project continues to operate strongly with a low level

of performance and availability deductions. The

construction contractor has completed works to ensure

that shower and toilet pods achieve the minimum

contracted temperatures in winter. The project reports

that strong relationships have been maintained between

the parties and the TA also reports no significant issues in

its most recent semi-annual report. Financial

performance remains in line with our expectations.

InspirED Education (South

Lanarkshire) PLC

BBB-(Insured)/Stable,

BBB-(SPUR)/Stable

U.K. James

Hoskins

The project schools have continued to perform well with

limited deduction levels aside from two unavailability

events in February and March. These led to deductions of

£2000 and £3,200, respectively. InspirED continues to

operate in line with its budgets for running costs and

reactive maintenance. Relationships are reported by all

parties to be strong with no major issues reported at

present. Financial performance remains in line with our

current forecast.

Transform Schools (North

Lanarkshire) Funding PLC

BBB(Insured) /Stable,

BBB(SPUR)/Stable

U.K. James

Hoskins

The project has continued to operate strongly with a low

level of deductions. As the schools are all recently

constructed, there is only a minimal planned life-cycle

spend over the next five years. The TA reports that

relationships remain strong between the project, its

subcontractors, and the local authority. There have been

only a low number of building defects reported during the

past six months and the project continues to deliver

financial performance in line with our expectations.


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Table 6


Health care

Capital Hospitals (Issuer)

PLC

AA-/Stable(insured),

BBB-(SPUR)/Stable

U.K. Manuel

Dusina

Construction performance is, in our view, satisfactory for

a complex project of this nature. Phase 1a of the Royal

London Hospital was successfully handed over on Oct.

31, 2011. Phase 1 of St Bartholomew's Hospital is also

complete, with Phase 2 slightly ahead of its scheduled

completion in 2014. We note a material improvement on

the relationship front. In our view, the catalyst for the

change has been the retrospective investigation exercise

which has brought ProjectCo and the Trust closer and

has stimulated cooperation. A head of terms, wrapping all

commercial issues outstanding, was signed in March

2013, and it was converted into a deed in July 2013.

Within the deed, there is also an agreement for the soft

FM to be brought in house by the Trust by 2017,

adopting a phased approach. In our view, this will de risk

ramp up and operation phases.

Catalyst Healthcare

(Manchester) Financing

PLC

BB+(insured)/Positive,

BB+(SPUR)/Positive

U.K. Manuel

Dusina

Financials are robust, especially now that retail price

index (RPI) level favors the project, but volatility cannot

be underestimated. Overall, remedy of construction

defects is going well and an agreement has now been

reached regarding the majority of the historical

unavailability deductions between LLPM&C and the

Trust. Sodexo's overall quality of services has improved.

The draft documents to amend the service failure points

(SFPs) trigger have been issued to funders and Sodexo.

Legal advice is awaited. We believe the current state of

operations, is reinforcing the satisfactory working

relationships between the parties and the project's

financial performance, and stabilizing the project.

BY Chelmer PLC

(Chelmsford Hospital)

BBB-(insured)/Stable,

BBB-(SPUR)/Stable

U.K. James

Hoskins

The hospital continues to operate well. Reported financial

deductions over the past three months have remained

low, with a minimal level of SFPs. Planned maintenance

tasks are reported to have been completed as scheduled

with no new material construction defects being noted.

Financial performance continues to be in line with our

expectations.

Catalyst Healthcare

(Romford) Financing PLC


BBB-(spur)/Stable

U.K. Mike

Wilkins

The project continues to deliver strong operational

performance with no deductions since October 2008,

despite the operational and financial challenges facing the

Trust. The Trust has confirmed that its working with

ProjectCo, Sodexo, and Siemens on numerous

cost-saving initiatives to help reduce the Trust's deficit.

Most of the clinical recommendations made in 2011 by

the Care Quality Commission (CQC), a government

health inspector, have been dealt with. Significant

improvements have been made by the Trust across

maternity & radiology services and the Trust's proposals

over the Accident & Emergency department over which

there were serious concerns, have also been sent to the

commission, marking the end of the CQC investigation.

The minimum and average DSCRs based on the March

2013 model were 1.23x and 1.29x, respectively.

However, the project still remains exposed to future

variations in RPI.


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Table 6


Central Nottinghamshire

Hospitals PLC


BBB(spur)/Stable

U.K. Mike

Wilkins

The Project continues its phase of stable operations. The

biggest operational concern was the upkeep of the

retained facilities, for which the ProjectCo. is responsible

for hard and soft FM services. Even though this still

continues to be a potential risk, it's been mitigated to an

extent with all parties agreeing to the Schedule 38, which

will enable the ProjectCo to claim relief from deductions

if the retained facilities have not attained Condition B-

status. The Trust's performance is the main credit driver

for the Project. In July 2013, the Monitor served the trust

a notice to fix failings in patient care and improve

hospital governance. We believe that there is a "very high

likelihood" that the government would provide

extraordinary support through the NHS. The Project's

financial profile is in line with our expectations, with

Standard & Poor's ADSCR of 1.18x and a minimum of

1.14x.

Consort Healthcare

(Birmingham) Funding PLC

BBB- (insured)/Stable,

BBB-(SPUR)/Stable

U.K. Mike

Wilkins

The disagreement with UHBFT on unavailability

deductions related to construction defects in the

mortuary, skin labs, and pneumatic tubes facilities will be

settled through an agreement expected to be signed

before the end of 2013. The deductions for mortuary

facility have been passed through to the CJV while the

ones for skin labs and pneumatic tubes facilities (circa

£1.3 million) still rest with the ProjectCo. which will pass

through the cost in full to the CJV. An agreement is

currently under negotiation . We expect this commercial

agreement to result in ProjectCo being refunded for some

of the deductions as well as the company formalizing a

number of construction variations delivered under a

performance development plan and additional

value-added works totaling £5.5 million. We also expect

the agreement to clarify the drafting around certain

elements of the payment mechanism.

Consort Healthcare (Mid

Yorkshire) Funding PLC

BBB(Insured) /Stable,

BBB(SPUR)/Stable

U.K. Manuel

Dusina

Project upgraded in May 13 reflecting our view of

improved operating performance, demonstrated by a

significant drop in the number of service failure points

(SFPs) reported, compared with the previous period. In

addition, since the appointment of a new interim CEO at

the Mid Yorkshire Hospitals NHS Trust (Trust), we

believe that the relationship between it and ProjetCo has

improved, which in our view supports the current rating.

A new ProjectCo manager has been appointed in Sep 13.

We expect this appointment to continue a partnering

style relationship with the trust. Consort Healthcare's

financial performance is in line with our forecast.

Consort Healthcare

(Salford) Plc

BBB+(Insured)/ Stable,

BBB+(SPUR)/Stable

U.K. James

Hoskins

The project continues to perform in line with

expectations. No major defects have been reported and

minor defects are promptly addressed by the building

contractor. Hard FM services provision continues to be

strong, with low levels of SFPs and deductions. ADSCRs,

as per our criteria, in the new operational model of 1.24x

minimum and 1.27x average remain strong in our view,

when compared with peers.


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Table 6


Consort Healthcare

(Tameside) Plc

BBB+/Stable (insured),

BBB+(SPUR)/Stable

U.K. James

Hoskins

The project continues to operate in line with our

expectations, with limited deductions and no material

latent defects reported. However, currently, the major

risk to the Project's rating is the potential deterioration in

credit quality of the Tameside Hospital National Health

Service Foundation Trust, the issuer's main revenue

source, given the financial and governance concerns

raised by the various regulatory bodies. This may

constrain the underlying rating on the project should the

Trust fail to resolve these concerns in a timely manner.

However, the Trust has implemented a recovery plan and

is improving its financial position. In our view, despite the

robust ADSCRs, without interest income, of 1.27x

minimum and 1.30x average, positive rating action is

limited until the credit quality of the project's main

revenue source--the Trust--remains under pressure.

The Coventry & Rugby

Hospital Co. PLC

BB+/Stable (insured),

BB+(SPUR)/Stable

U.K. Robin

Burnett

Overall, delivery of both soft and hard facilities

management (FM) services appears to have stabilized.

This is reflected in the trend of SFPs accrued, which is

now steady and consistently below contractual threshold

levels. A number of issues are still to be addressed,

however, as ProjectCo reports that the Trust has become

steadily more demanding, especially with respect to soft

FM, and cleaning in particular.

Healthcare Support

(Newcastle) Finance PLC

BB+(insured)/Stable,

BB+(SPUR)/Stable

U.K. Robin

Burnett

Work to the angiography room, the result of a previous

dispute with the Trust that led to the issuance of two

warning notices, was completed in mid-September.

Consequently, both warning notices and all associated

SFPs were withdrawn. The ongoing dispute over the

clinical office block remains to be resolved, however,

although discussions appear to be at a relatively

advanced stage. The construction contractor continues to

accrue liquidated damages, which have now reached a

total of almost £1.5 million, of which £700,000 is still

outstanding. Operationally, performance continues to be

satisfactory and, over the six months to the end of August

2013, the level of SFPs and deductions appears to have

stabilized at a low level.

Healthcare Support (North

Staffs) Finance PLC

BBB-/Positive (insured),

BBB-(Spur)/Positive

U.K. Manuel

Dusina

Construction was completed on schedule in June 2012,

marking a 100% step-up to the unitary payment.

Although Sodexo has generally performed well, it

recently reported a significant amount of deductions due

to problems in its cleaning and portering services. The

outlook revision reflects our view that the project has a

higher level of operating risk than we previously

anticipated. This risk is evident from the accumulation of

a sufficient number of SFPs for portering and cleaning at

the University Hospital of North Staffordshire (UHNS) to

trigger warning notices. Financials are in line with our

expectations.

NewHospitals (St. Helens

and Knowsley) Finance

PLC


BBB-(SPUR)/stable

U.K. Robin

Burnett

A small number of defect rectification tasks are still to be

completed, with the external re-cladding works the only

material issue, due to continue into 2014. No significant

operational issues to report. Penalties and SFPs remain

low compared with contractual thresholds across all

services. Innisfree completed the purchase, from Taylor

Woodrow Construction, of the minority share in the

project it didn't already own in August 2013, and is now

the sole owner of the project.


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Table 6


Octagon Healthcare

Funding PLC


BB+(SPUR)/stable

U.K. Robin

Burnett

The project continues to operate well, in our view.

ProjectCo reports occupancy remains very high. Service

levels, however, also remain high. The 12-year latent

defects period ended in August 2013. A detailed survey

was carried out ahead of this date, raising three issues

that are being taken forward by ProjectCo with the

original constructor. ProjectCo also carried out a review

of forecast lifecycle expenditure. This could result in

some, relatively minor, revisions to forecasts that will be

incorporated in the next financial model update, due in

December 2013.

Peterborough (Progress

Health) PLC

BBB-(insured)/Stable;

BBB-(SPUR)/Stable,

U.K. Lemos,

Maria

We understand that ProjectCo is in the process of finding

a replacement after Broofield's announced its intention to

sell its hard FM contract. Although this may represent

some operational risk during the transition, we do not

believe that this will have a negative bearing on the

project issue rating. In our opinion, there is a wide field of

replacements, the nature of operations is not complex,

and the liquidity in the project is sufficient to withstand

the transition. The full unitary payment continues to be

made on time by the trusts. SFPs have stabilized at levels

well below the thresholds that could trigger warning

notices and far below the termination threshold. The few

performance deductions have been fully passed through

to the respective subcontractors, leaving ProjectCo

unaffected.

The Hospital Co. (Swindon

& Marlborough) Ltd.

BBB+(insured)/Stable,

BBB+(SPUR)/Stable

Channel

Islands

Mike

Wilkins

The project maintains stable operating performance and

benefits from high occupancy levels leading to a

suspension of the performance regime. Though

operationally the TA considers the issue of pin-holing of

pipework as a "high risk" given the possibility of large

areas of the asset becoming unavailable due to a major

failure, there haven't been any unavailability events or

deductions because of it for the past year as the

ProjectCo and Carillion are prioritising their work on it.

Given the better-than-expected condition of assets, the

project has revised its lifecycle cost forecasts downward

resulting in an improvement in the Standard & Poor's

ratio, which now stands at an average of 1.32x and a

minimum of 1.19x. The downward revision of lifecycle

costs has been approved by the controlling creditor and

its TA.

The Walsall Hospital Co.

PLC


BBB(Spur)/stable

U.K. James

Hoskins

Walsall Hospital Co. continues to operate in line with our

expectations, with limited deductions and no material

latent defects reported. ProjectCo continues to monitor

and audit services to ensure compliance with the contract

requirements. No material issues have been identified

from recent audits. Financial performance continues to

be in line with our expectations.

Transport

Amey Lagan Roads

Financial PLC

BB(insured)/Stable ;

BB(SPUR)/Stable

U.K. Robin

Burnett

ProjectCo continues to deliver stable operations, led by a

new management team. The independent technical

adviser also reports satisfactory operational performance.

The project's sponsors are currently engaged in

discussions with the aim of reducing the interest margin

on the European Investment Bank loan, and hence

improve the project's financial profile.


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Table 6


Autolink Concessionaires

(M6) PLC

AA-/Stable(insured),

BBB-(SPUR)/Stable

U.K. Lemos,

Maria

Toll revenues remain relatively insensitive to the subdued

traffic performance. This is in large part due to the

project's banding mechanism, which introduces revenue

protection subject to minimum thresholds of traffic

movements for light and heavy vehicles. Based on the

latest traffic movements, we think that there is still a

considerable cushion available until returning to Band 1

for both OVs and heavy vehicles (HVs) (17% and 16%

decrease required respectively). This, in turn, makes this

project largely immune to moderate-to-strong traffic

declines in the foreseeable future, in our view. Costs in

2012 remained on budget and the repair works progress

as expected.

Autovia del Camino S.A. BB+/Stable,

BB+(SPUR)/Stable

Spain Lemos,

Maria

Traffic in the 12 months to April 2013 decreased by 5%

for light vehicles (LV) and 4.1% for HVs compared with

the previous year. Although this year-to-date traffic

performance is weaker than we had previously

anticipated (flat traffic for the whole year 2013), it is offset

by a 3% toll increase, which is considerably above our

baseline expectations. Operating costs have remained

well in line with budget. Our updated base-case

assumptions for traffic are for a decrease of 4% in LVs

and 6% in HVs for 2013, and flat growth for 2014. From

2015, we forecast long-term traffic growth of 1.5%

CountyRoute (A130) PLC Senior unsecured B+/Neg;

ICR B-/WatchNeg

U.K. Robin

Burnett

Operationally, the project has continued to perform well.

Traffic volumes have shown a marked improvement

since the completion of roadworks (not related to the

project), with monthly average daily traffic volumes over

the six months to the end of Sept 2013 averaging monthly

growth of 5.0% for the northern section of the scheme

and 11.6% for the southern section. We continue to await

the receipt of an updated financial model, containing both

revised traffic forecasts and an updated major

maintenance expenditure profile.

DirectRoute (Limerick)

Finance Ltd.

BB-/Negative (insured),

BB-(SPUR)/Negative

Ireland Robin

Burnett

Traffic volumes for the seven months to the end of July

2013 have shown strong growth over 2012, and continue

to extend the pattern of growth beginning around

mid-2011. Average daily traffic levels for this period are

4.2% up on the same period for 2012. This is

encouraging, but is still 29% below guaranteed levels.

Full remote operation of the second toll booth plaza at

Clonmacken finally began on Jan. 21, 2013. Savings have

resulted, however. Tolling costs remain stubbornly above

budget, although this is offset by other savings realized

elsewhere.

Highway Management

(City) Finance PLC


BBB(SPUR)/Stable

U.K. Robin

Burnett

There are no significant issues to report, with few penalty

points accrued and operations generally stable.

Ostregion

Investmentgesellschaft Nr.

1 S.A.

B+(Insured)/Negative,

B+(spur)/Negative

Austria Maria

Lemos

We understand that the negotiation between the

concessionaire Bonaventura and the key project parties

concluded with the ratification at the end of February

2013 in the terms anticipated in our latest Research

Update, published on Feb. 1, 2013. This includes the sale

of participation rights and control to mezzanine debt

holders, the subordination of mezzanine principal and

interest and the release of the last payment of the

construction contract to the contractor. Traffic in the

whole year 2012 performed above our baseline forecast,

with light and heavy vehicles growing by 7% and 3.8%

respectively vis-a-vis 2011. Year-on-year traffic evolution

in the first quarter of 2013 shows a deceleration,

however, with light vehicles still growing at 3.8% but

heavy vehicle traffic remaining virtually flat.


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Table 6


Road Management

Consolidated PLC

B(insured)/Stable,

B(SPUR)/Stable

U.K. Robin

Burnett

For the first half of 2013, traffic volume growth on the

A419/417 road was broadly in line with budget and

above national trends. However, as it has been in the

past, traffic volume growth on the A1(M) road was below

budget and national trends. Day-to-day operations

continue to be satisfactory.

Autovia de la Mancha, S.A. AA-(Insured)/stable,

B(spur)/Stable

Spain Lemos,

Maria

According to the information provided by Aumancha,

only the toll payments corresponding to November and

December 2012 were on arrears as of mid-April 2013. We

expect these two bills to be paid imminently, however,

given that payment has already been approved with

funds from the Spanish government extraordinary

financing mechanism established to help local and

regional governments pay suppliers. January 2013 toll

payment was done on time and there is no other 2013

payment on arrears, given that tolls are set to be paid 60

days on arrears according to the concession contract.

Traffic continued its declining trend in 2013, with a

year-on-year decline of 6.5% (-5.9% for LVs and -10.5%

for and HVs) in the first four months of the year. This was

partially offset by toll increases, which has led to

year-on-year revenue decline of 2.7% in that period.

Verdun Participation 2 S.A. AA-/Stable,

BBB-(insured)/Stable,

BBB-(SPUR)/Stable

France Manuel

Dusina

Recent traffic developments confirmed the high

seasonality which this project is exposed to; showing the

bridge's distinctive feature of being mainly a holiday

route and therefore more sensitive to flows of

holidaymakers. As of Aug. 31, 2012, annual traffic levels

are in line with previous year-on-year levels. We have

revised our base-case scenario for the project's

performance, lowering the expected cumulative annual

traffic growth rates for 2013 and 2014 to 1.2%, compared

with 1.7% previously. However, its supportive

concession/tariff mechanism, and recently restrictions

imposed on HVs to cross the centre of Millau are

increasing the number of HVs using the bridge, have

partially offset the effect of traffic volatility on cash flows

available for debt service (CFADS).

Channel Link Enterprises

Finance PLC

AA-/Stable,

BBB(SPUR)/Stable,

U.K. Robin

Burnett

Eurotunnel reported a 10% increase in consolidated

revenues for H1 2013, compared with H1 2012; stable

EBITDA and net result, excluding the MyFerryLink ferry

activities. Summer traffic levels were also reported as

very strong, with yields also increasing. Eurotunnel

worked closely with the French and U.K. governments in

formulating their responses to the European Commission

reasoned opinion, submitted at the end of September.

The opinion, issued in June 2013, cited high access

charges, weak regulation, and a restrictive tunnel usage

agreement. Future progress will be closely monitored,

though no action is expected in the near term.

High Speed Rail Finance 1

PLC

A-/Stable U.K. Manuel

Dusina

The project has a strong rationale as the sole high-speed

rail connection between London and the Eurotunnel and

in addition it benefits from a clear and transparent

regulatory framework set up by the Office of Rail

Regulation. It is a mix of availability and traffic risk with

the former (domestic services) accounting for approx.

60% of total revenues and the latter (international

services) mitigated by strong track record and relatively

stable traffic volume at present. In addition, currently

HSRF1 is showing strong operational performance, well

below the penalty threshold.


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Table 6


Energy and Wind Power

Breeze Finance S.A. B/Stable, B(SPUR)/Stable

and C/Stable

Germany Lemos,

Maria

As of June 2013, the cumulated average IWET index is

86% compared to the expected longtime average around

109% for this period; resulting in lower revenues and a

cash flow shortfall of €5.2 million. The project was able to

fully cover the A-notes debt service on April 19, 2013

payment date--without using the Class-A debt service

reserve account--but the principal redemption on Class B

notes(€2.15 million) was fully deferred, and €1.74 million

out of a €2.24 million of interests were deferred. The

C-notes debt service (€4.5 million) was fully deferred.

While we view a relatively high likelihood that the Class

A debt service reserve account (DSRA) will remain

unused on the April debt service dates (following the

high-wind winter season), we continue to see a relatively

high chance that the project may recourse to the reserve

on the October debt service payment dates.

CRC Breeze Finance S.A.

(Breeze Two Transaction)

C/Stable, B-/Stable Germany,

France

Lemos,

Maria

Although we still lack official figures for 2012 year-end

from management; we understand wind revenues were

2% lower than 2011, although considerably above that

produced in the historically weakest wind year (2010) and

5% higher than the new IWET-index forecasts. As of first

quarter of 2013, real productions was about 26% below

expectations, as a result of a very bad wind situation. To

date, operating cash has proved sufficient to cover Class

A debt service in full & on time, without needing the

remaining €10 million of cash in senior DSRA, which

remains only partly funded.

Premier Transmission

Financing PLC

A(insured)/Stable,

A(SPUR)/Stable

U.K. Lemos,

Maria

The U.K. regulator has proposed the development of a

single gas network operator for all the transmission lines

in Northern Island and the Republic of Ireland. This

would replace the existing three operators. Regardless of

the final decision, we expect the regulatory framework for

Premier Transmission Financing to remain the same

credit supportive, which is the main factor underpinning

the ratings and outlook on its debt. We understand that,

as of the end of March 2013, the DSRA and the cost

reserve account remained fully funded with £9.5 million

and £3.1 million respectively. On the same date, free cash

balances (which include the ratio buffer amounts) stood

at £8.1 million.

Belfast Gas Transmission

Financing PLC


A(spur)/Stable

Ireland Maria

Lemos

The U.K. regulator has proposed the development of a

single gas network operator for all the transmission lines

in Northern Island and the Republic of Ireland. This

would replace the existing three operators. Regardless of

the final decision, we expect the regulatory framework for

Belfast Gas Transmission Ltd. to remain credit

supportive, which is the main factor underpinning the

ratings and outlook on its debt. We understand that, as of

March 31, 2013, cash balances at the DSRA (£1.83

million) remained fully funded at or above the

contractually defined levels. On the same date, cash

balances held by the Project Co. in form of various bank

deposits and short term high liquid investment stood at

£702,000.


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Table 6


Exeltium S.A.S. BBB-/Stable (ICR) France Manuel

Dusina

Exeltium S.A.S. entered into lock up at the end of 2012

following the credit quality deterioration of its put option

provider, which is also a material offtaker. We believe

that this could dampen the credit quality of Exeltium,

only if coupled with a sustained drop in the price of

electricity on the French market. The latter would

increase the likelihood of offtakers opting out of their

contracts in 2020. Furthermore, despite the fact that the

average credit quality of the offtaker's pool has

deteriorated, we believe the revenue counterparty does

not yet constrain the project's current rating. The rating is

discounting the key weakness of the structure,

refinancing risk. Exeltium has hired advisors to engage in

discussion with the French public authorities, solve the

lock up situation, and kick off refinancing process.

Alte Liebe 1 Ltd. B-/Stable;

B-(SPUR)/Stable

Jersey Lemos,

Maria

In our view, the operating performance of some of Alte

Liebe's WFCs improved slightly during 2012, although

wind levels still remain well below the historical wind

averages to which the debt was originally sized. Turbine

availability remained in line with the average of the past

two years and above the sponsor's initial target

(97%)--except for Wilmersdorf-Mangelsdorf and

Rakow-Gardelegen, where availability fell to about 94%.

This underperformance was mainly due to gearbox

failures and grid security shutdowns ordered by the

utilities, but we understand that the generation loss was

largely offset by insurance cover and compensation from

the utilities. All wind farm companies serviced their

respective on-loan payments with cash flows from

operations during 2012, given the relatively good wind

conditions.

Oil and gas

Ras Laffan Liquefied

Natural Gas Company Ltd.

(II) and Ras Laffan

Liquefied Natural Gas

Company Ltd. (3)

A/Stable Qatar Karim

Nassif

The continued robust crude prices have supported DSCR

of 12.6x as of June 30, 2013, under Standard & Poor's

criteria. The latter is in line with the 12.3x DSCR forecast

for the full year to 31 Dec. 2013. We forecast DSCR

above a minimum of 3.9x under our base-case scenario

over 2013-2016.

Njord Gas Infrastructure AS BB/Stable U.K. Robin

Burnett

No developments since the rating action. Following the

change in Government in Norway, we will monitor any

signs of policy change as they relate to the regulation of

the Gassled asset.

Solveig Gas Norway AS BBB-/Negative U.K. Robin

Burnett

No developments since the rating action. Following the

change in Government in Norway, we will monitor any

signs of policy change as they relate to the regulation of

the Gassled asset.

Watercraft Capital S.A. BBB/Negative Luxembourg Manuel

Dusina

ProjectCo was granted a 30-year concession (extendable

for two 10-year periods) by the Spanish government in

2008 for the re-development of Castor, a depleted oilfield

reservoir. The rating reflects, among other factors, the

project's high revenue stability and predictability, and its

strategic importance, as well as the transaction's highly

leveraged financial profile, partially offset by the credit

enhancement provided by a second-lien liquidity facility

provided by the European Investment Bank to be used

under stress scenarios. Micro-seismic activity detected in

the area has stopped the gas injection, important to

obtain final acceptance. The suspension would only affect

credit quality if it results in the final commissioning being

materially delayed beyond the long stop date.


1216293 | 301112013


Table 6


Other

Ajman Sewerage (Private)

Co. Ltd.

BB+(insured)/Stable,

BB+(SPUR)/Stable

United Arab

Emirates

Karim

Nassif

Ajman Sewerage's establishment of track record of

successful operations since completion of enhancement

works in September 2012 along with significant

improvement in collections and expectation for financial

performance led to an upgrade of the project by 1 notch

to BB+ in July 2013. We expect Ajman Sewerage will

report debt service coverage ratios (DSCRs) (on a

six-month look back basis) of 1.5x or above, under our

criteria, over the period 2013 to 2016.

Abengoa S.A. B/Neg (ICR) Spain Lemos,

Maria

The negative outlook on Abengoa reflects a one-in-three

chance of a downgrade if the company's liquidity

weakens--for instance, due to material unwinding of the

sizable working capital deficit--potential proceeds from

asset sales are not largely used for debt repayment, or if

we do not see deleveraging over the medium term.

Specifically, at the current rating level, we expect a

substantial reduction in negative consolidated free cash

flow from 2014 onward, helped by a significant reduction

in capital expenditures, and deleverage to below 9x

adjusted debt to EBITDA by mid-2014, and gradually

thereafter. We could also downgrade the rating if we

were to reassess the business risk profile to weak, for

example as a consequence of sales of mature assets or

deterioration in profitability or market conditions.

Ruwais Power Co. PJSC

(Shuweihat 2)

A-/Stable United Arab

Emirates

Nassif,

Karim

Since assigning ratings in August 2013 the project has

been performing in line with expectations. Average and

minimum DSCRs of 1.20 and 1.18x are anticipated over

the project's life.

*Ratings are as of Nov. 13, 2013. SPUR--Standard & Poor's underlying rating.


Table 7


All changes from April 1, 2013, to Sept. 30, 2013

Issuer To From Date Reason

No. of

issues

Ajman Sewerage (Private) Co.

Ltd.

BB+/Stable BB/Positive July 17,

2013

On good track record and improved

financials

1

Alpha Schools (Highland)

Project PLC

BBB+/Positive BBB/Positive Sept. 3,

2013

On improved operations 2

Autovia del Camino S.A. BB+/Stable BBB-/Negative June

27,

2013

On weaker traffic growth prospects 2

Consort Healthcare (Mid

Yorkshire) Funding PLC

BBB/Stable BBB-/Positive May 13,

2013

On improved operating performance 2

CountyRoute (A130) PLC B+/Negative BB-/Watch Neg April

23,

2013

Senior debt downgraded on revised

maintenance costs

1

Healthcare Support (Newcastle)

Finance PLC

BB+/Stable BB+/Watch Neg July 30,

2013

On positive dialogue in place between

Project, Construction contractor, and the

Trust after settlement of outstanding issues

2


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Table 7

Recent Rating Activity (cont.)

Healthcare Support (Newcastle)

Finance PLC

BB+/Watch Neg BBB-/Watch Neg April

18,

2013

On second warning notice received 2

Healthcare Support (North

Staffs) Finance PLC

BBB-/Stable BBB-/Positive Sept.

13,

2013

On increased operating risk 2

Autovia de la Mancha, S.A. B/Stable/-- B+/Negative May 28,

2013

Downgraded due to continuing arrears. 1

Abengoa S.A. B/Negative* B+/Watch Neg April 2,

2013

On announcement of Befesa disposal 1

Njord Gas Infrastructure AS BBB+/Watch Neg A-/Watch Neg May 2,

2013

On lack of transparency in tariff review

process

4

Njord Gas Infrastructure AS BB/Stable BBB+/Watch Neg Aug. 1,

2013

On material tariff reduction 4

Northland Resources A.B. D C/Watch Neg Sept. 9,

2013

On missed interest payment 1

Northland Resources A.B. NR D Sept. 9,

2013

Rating withdrawn at issuer's request 1

Solveig Gas Norway AS BBB+/Watch Neg A-/Watch Neg May 2,

2013

On lack of transparency in tariff review

process

1

Solveig Gas Norway AS BBB-/Stable BBB+/Watch Neg Aug. 1,

2013

On material tariff reduction 1

Holyrood Student

Accommodation Plc

BBB/Stable July 15,

2013

New 2

Ruwais Power Co. PJSC

(Shuweihat 2)

A-/Stable Aug. 6,

2013

New 1

Watercraft Capital S.A. BBB/Negative Aug. 8,

2013

New 1

Sustainable Communities for

Leeds (Finance) PLC

BBB-/Stable June

21,

2013

New 1

Uliving@Hertfordshire A-/Stable May 24,

2013

New 1

NR--Not rated. D--Default. *Issuer credit rating.

Contact Information

Table 8

Contact Information

Credit analyst Location Telephone E-mail

Michela Bariletti* London (44) 20-7176-3952 [email protected]

Robin Burnett London (44) 20-7176-7019 [email protected]

Mike Wilkins London (44) 20-7176-3528 [email protected]

Maria Lemos London (34) 91-389-6951 [email protected]

Manuel Dusina London (44) 20-7176-5530 [email protected]

James Hoskins London (44) 20-7176-3393 [email protected]

Karim Nassif Dubai (97) 1-4372-7152 [email protected]

Etai Rappel Tel Aviv (972) 3-753-9718 [email protected]


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Table 8

Contact Information (cont.)

Tom Dar Tel Aviv (972) 3-753-9722 [email protected]

Luisina Berberian London (44) 20-7176-3276 [email protected]

Sofia Grach Tel Aviv (972) 3-753-9724 [email protected]

Watcharee Corkill London (44) 20-7176-3989 [email protected]

*Team leader.

Related Criteria And Research

All articles listed below are available on RatingsDirect on the Global Credit Portal, unless otherwise stated.

• Project Finance Construction and Operations Counterparty Methodology, Dec. 20, 2011

• Updated Project Finance Summary Debt Rating Criteria, Sept. 19, 2007

Additional Contact:

Infrastructure Finance Ratings Europe; [email protected]


1216293 | 301112013


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