Heathrow Funding Issues £400M in New Notes

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Heathrow Funding, a corporate securitization that issues bonds raising proceeds for London’s Heathrow Airport and related rail link services, is issuing £400 million (US$520 million) in new notes for the airport to repay upcoming debt maturities.

Standard & Poor’s has affixed an ‘A-’ to the sterling-denominated Class A-37 notes, which will have a maturity date of 2049. The proceeds will provide funds for the airport’s repayment of existing Class A-12 notes set to mature in October 2016, although S&P noted the funds may be used for general corporate purposes.

S&P said the new issuance of senior bonds would not impact existing ratings for notes issued by Heathrow Funding, with all existing Class A and B notes’ ratings affirmed at ‘A-’ and ‘BBB’, respectively since there would not be a material increase in leverage.  

Heathrow Funding was closed in 2008 but issues new notes periodically up to a senior net-debt-to-RAB (regulatory asset base) level of 70% (the ceiling that would lead to a dividend lock-up if breached). The securitization funds its obligations through various revenue sources, primarily passenger charges, according to S&P.

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