Moody's Investors Service announced last Thursday it has assigned a provisional Baa1 rating to the approximately €146 million senior secured amortising project bonds due 2042 to be issued by company created for the development of the N-25 New Ross Bypass PPP project in Ireland. Moody's added that the rating is stable.

The road company is composed by BAM PPP, PGGM and Iridium (ACS group). Investors controlled by Allianz Global Investors GmbH will buy the bonds.

The proceeds from the bonds will be used to partially fund the design, construction, operations and maintenance of the N25 New Ross Bypass road scheme in County Wexford and County Kilkenny, South East Ireland.

The proposed N-25 New Ross Bypass includes the construction of sections of both the N-25 and N-30 routes. More particularly it is envisaged that the road PPP project will comprise works of approximately 14.6 km of dual carriageway (N-25 & N-30 routes) and 1.2 km of single carriageway (New Ross N30 route). The project includes various structures (junctions and road bridges), the most notable of which is the 887m River Barrow crossing, a three tower extradosed bridge.

The total project investment is estimated at €215 million (US$337.1 million).

The New Ross N25 road scheme is the first in Ireland to benefit from the European Investment Bank's project bond initiative.

The provisional rating on the Bonds is based on the project's stand-alone risk profile, supported by the credit enhancement provided as part of the EIB's project bond initiative.The rating reflects as positives:

• (1) an experienced construction joint venture with established track record of successfully delivering PPP road schemes in Ireland;
• (2) an availability-based revenue stream with Baa1 offtaker and no exposure to traffic volumes;
• (3) straightforward operating and maintenance requirements and
• (4) standard PPP structural features.

The rating is, however, constrained by:

• (1) very high financial leverage, at nearly 90% of total capital;
• (2) the risk associated with delivery of the most significant civil structure, the River Barrow Bridge; and
• (3) the individual contractor credit profiles, though mitigated by the joint venture structure and small size of the project's capital expenditure relative to the construction joint venture's combined revenues.