The Strategic Rail Authority (SRA) has unleashed proposals for a new U.K. rail sector franchise policy, redefining the degree of government backing in deals from this arena. Consequences for securitizations of rolling stock options are still unclear, but market sources say this funding source will remain a viable funding option. According to a Fitch Ratings report earlier this month, the timing of this new franchise policy indicates that the market will see at least one deal before the end of the year.

Although the SRA earlier this year published a strategic plan reiterating a 10-year target of 50% growth in passenger rail services and 80% growth in freight services, it also publicly stated that its main objective is to ensure that the current network runs economically and efficiently. Concerns have arisen, however. What the SRA considers to be economic and efficient might translate into slower growth rates. For ABS deals today, the scaling back of growth targets could affect rolling stock demands and lease rates, Fitch said.

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