Ratings agency Moody’s changes outlook on German motorway PPP bonds

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Moody's Investors Service has announced that it has changed the outlook on the Baa2 rating on Via Solutions Nord GmbH & Co. KG's (VSN) EUR429.1 million (US$490.04 million) in senior secured bonds to negative.

VSN is a special purpose company that entered into a 30-year project agreement with the Federal Republic of Germany to fund the extension and operation of a section of the A7 motorway, north of Hamburg, in 2014.

However, in December 2018 amendments were made to both the construction and project agreements after several senior lenders stopped bond purchases in August 2018, due to the high risk that the project company and its construction consortium would not be able to complete project works prior to the financing longstop date. This triggered a review of the ratings assigned to VSN's bonds.

The negative outlook reflects the elevated risk that the project incurs delays on the final, and most complex section consisting of the eastern tube of the Schnelsen Tunnel (road section BA.7) and the very tight buffer between the new completion date and the financing longstop date. Breaching the longstop date would be an event of default enabling lenders to accelerate the debt.

VSN is owned 49% by Hochtief PPP Solutions GmbH, 41% by DIF Infra 3 PPP 3 Luxembourg S.à.r.l., and 10% by KEMNA Bau Andreae GmbH & Co. KG.

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