Meridiam, Scottish Widows in £360m debt raise

Scot Roads Partnership is to borrow a total of £359.6 million (€437 million; $602 million) to finance the design, construction and operation of additional roads to central Scotland’s existing network.

The debt raise will comprise a bond issue comprising £174.8 million of senior secured fixed-rate bonds and a £174.8 million senior secured fixed-rate loan from the European Investment Bank (EIB), which will both amortise over approximately 31 years.

Scot Roads Partnership is owned by asset managers Meridiam Infrastructure (30 percent) and Scottish Widows Investment Partnership (30 percent) alongside developers Amey Ventures (20 percent) and Cintra (20 percent).

The project will complete the final section of central Scotland’s motorway network by upgrading the A8/M8 between junctions six and eight, together with other related works on the neighbouring M73 and M74. The A8/M8 is the motorway link between the two main cities of Glasgow and Edinburgh.

The upgrade work, first announced last August, is valued at £415 million. Debt is due to fully amortise over approximately 31 years, with repayments supported by availability-based unitary charge payments from the Scottish government. The project is leveraged at 90 percent.

Scot Roads Partnership will have responsibility for the operation of 12 kilometres of existing roads and for the construction of a further 25 kilometres. It will enter into an availability-based concession with the Scottish government over a period of around 33 years.

Standard & Poor’s attributed an ‘A-’ rating to the debt issue, underlining the relative technological simplicity of the upgrade work, the contractors’ experience, the off-takers’ credit worthiness and the strong liquidity support during construction and operation. The outlook on this assessment was deemed ‘stable’.