17 banks help Macquarie refinance €3.8bn for French road

The Australian group, together with France’s Eiffage, has obtained a €2.8bn, five-year loan in addition to a €720m revolving credit facility. Moody’s deemed the refinancing ‘moderately credit positive’, but warned the toll road network’s Baa3 rating might be revised in the future.

Macquarie Atlas Roads, which operates six toll roads across the globe, and French infrastructure developer Eiffage, have managed to refinance €3.8 billion of debt backing a toll road network in France one year ahead of schedule, the partners announced earlier this week.

A syndicate of 17 banks – including the likes of BBVA, Bank of Tokyo Mitsubishi, Lloyds, ING and Santander, to name just a handful – provided a total of €3.48 billion of debt to Eiffarie, the holding company owning the majority of Societe des Autoroutes Paris-Rhin-Rhone (APRR), Europe’s fourth-largest tolled motorway network, spanning some 2,264 kilometres.

The debt breaks down into a five-year, €2.76 billion term loan, paying a margin of 300 basis points with a step-up of 50 basis points for years four and five of the loan. The loan is also cash swept, with APRR having to channel 25 percent of its free cash flows to service debt in the first three years of the loan, 75 percent of free cash flows in year four and 100 percent in the loan’s final year. 

Cash sweeps have become common following the 2008 crisis and are intended to incentivise borrowers to refinance early. In addition, the bank syndicate is providing a near-€720 million revolving credit facility, “which will replace existing undrawn credit facilities,” Macquarie said in a statement.

The bank debt, together with proceeds from an interim dividend declared earlier this month, will allow Eiffarie to pay down a €3.8 billion credit facility originally maturing in February 2013. To view details about the refinancing, including a complete list of banks, please visit Infrastructure Investor Assets

Joanna Fic, an analyst with ratings agency Moody’s, deems the refinancing to be “moderately credit positive for APRR,” which Moody’s rates Baa3, but warns that “once the refinancing process is completed, future financial policies, the requirements of the cash sweep mechanism in the Eiffarie bank loan and their impact on the rating of APRR will need to be further assessed”.

Baa3 is at the bottom of Moody’s investment grade bond ratings, meaning a downgrade would effectively turn APRR’s bonds into ‘junk’. APRR has issued a total of €2.55 billion of bonds since last January.