London-listed heavyweight makes infra debt move

HICL has invested £50m in bonds issued by the UK’s A13, a rare exception for an asset class that does not generally offer ‘the appropriate balance of return, duration and inflation linkage’.

HICL Infrastructure Company has bought a proportion of the senior secured bonds issued to finance the UK’s A13 for £50.1 million ($66 million; €58.8 million).

The bonds were issued in 2000 to finance the A13 Thames Gateway PFI project. They benefit from an unconditional and irrevocable financial guarantee from monoline MBIA UK with regards to all payments of interest and principal.

The bonds, which mature in 2028, have a direct RPI linkage. They are expected to generate a total annual return of about 7 percent.

The Thames Gateway is a £220 million, 30-year PFI concession to design, build, finance and operate a 20km section of the A13 road between Limehouse, London and Wennington, Essex on behalf of Transport for London.

HICL funded the investment through a combination of existing cash resources and its dedicated revolving credit facility.

“Most senior debt investments do not offer the appropriate balance of return, duration and inflation linkage, but when they do, we will consider them for the group,” said Tony Roper, a director at Infrared Capital, HICL’s investment advisor.