Fitch upgrades Sydney toll road rating

The ratings agency has upgraded the senior debt rating of the WestLink M7 toll in Sydney from BBB to BBB+. It put the upgrade down partly to the ‘operational toll road expertise’ of sponsors Transurban, Macquarie Infrastructure Group and funds managed by QIC.

Ratings agency Fitch has upgraded the credit rating of the debt facility backing the WestLink M7 toll motorway in Sydney.

Fitch has shifted the senior bank facilities rating of special purpose borrowing entity WSO from BBB to BBB+, allocating it a stable outlook. WSO’s debt includes a A$500 million (€292 million; $416 million) tranche due in 2010, a A$500 million tranche due in 2012 and a A$250 million tranche due in 2015.

WestLink M7: moving up
in credit ratings

Fitch said the upgrade reflects the importance of the toll road as an integral link in Sydney’s road transport network and the quality of the road’s connections with Sydney's three major and operationally mature motorways.

Fitch also put the upgrade down to the “operational toll road expertise” of the M7’s major sponsors and shareholders: Transurban, which owns a 50 percent stake, and the Western Sydney Road Group, which holds the remaining 50 percent and is jointly-owned by Macquarie Infrastructure Group and funds managed by institutional investment manager QIC. It went on to say the road’s higher-risk operational aspects are mitigated through the sponsors’ use of “experienced, competent and creditworthy” contractors.

Fitch subsequently cited the procuring authority Roads and Traffic Authority of New South Wales’ contractual framework, which it said provides a high level of certainty of rights and obligations, including to debt holders.

Going forward, Fitch said the combination of ongoing industrial development, population growth, and employment growth in western Sydney should continue to boost traffic levels on the M7.

The WestLink Group was awarded the 34-year concession to design, build, finance, operate and maintain the 40 kilometre M7 motorway in 2003.