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Chicago Parking Meter (CPM), the concessionaire of Chicago metered parking system, has issued US$200 million 4.52% senior secured notes due 2024. Moody's Investors Service has assigned a Baa3 rating to the notes.
Proceeds from the note issuance will be used to fund a cash distribution to the Sponsors and to pay transaction fees.
"Concurrent with this rating action, we are affirming the Baa3 rating on the existing $600 million of 5.489% senior secured notes due December 2020. The rating outlook is stable."
Moody's said that the rating reflects the highly political environment, following a severe recession in 2008 and 2009, that surrounds the 75-year Concession Agreement. But the rating agency also mentions that the concession agreement also provides for a clear, formulaic compensation process under a number of different events, thus protecting CPM.
The rating also considers the relative inelasticity of demand for parking, high revenue to free cash flow conversion, and demonstrated operating and management track record.
According to Moody's, CPM has EBITDA/Interest coverage and funds from operations to debt ratio (FFO/Debt) averaging approximately 2.5 and 9%, respectively, from 2009 through the twelve months-ended March 31, 2014.
The report also informs about parking volumes in 2014 which are 3.3% lower and operating expenses which increases 7.5%. Moody's expect that the project would repay all its debt by 2042.
CPM, which is owned 50.1% by Morgan Stanley Infrastructure Partners, 25% by Allianz Capital Partners and 24.9% by Abu Dhabi Investment Authority, has a contract agreement with the City of Chicago for a 75-year concession to operate the city's on-street, metered parking system.
The parking system is formed by over 35,000 on-street and 17 surface lot parking spaces in the Chicago metropolitan area and about 4,600 pay stations. CPM is also responsible for the operation of about 1,240 reserved metered parking spaces with about 40 pay stations.