Morgan Stanley sells $600m of Chicago parking meter bonds

Chicago Parking Meters, the Morgan Stanley Infrastructure Partners-backed company that owns a 75-year concession on the city’s parking meters, has successfully managed to sell $600 million of senior secured notes.

Reuters first reported on the sale, which was confirmed to Infrastructure Investor by a Morgan Stanley spokesperson.

The bonds will mature on December 30, 2020, with coupon and yield set at 5.48 percent, Reuters reported. They are rated Baa3 by Moody’s and BBB- by Standards & Poor’s, the ratings agencies.

“We view the company's business risk profile as excellent, our highest business risk profile category, due to its long-term concession of an important city asset, on-street meter parking, and the strong concessionaire protections of the concession agreement,” Standard & Poor’s wrote in its credit rating report on the bond issue.

Standard & Poor’s also said Chicago Parking Meters’ primary credit risk was refinancing risk in the year 2020. That’s because the bond issue is due in one large “bullet” maturity at that time, with semi-annual interest payments due in-between.

Barclays, Credit Suisse and Morgan Stanley acted as joint bookrunners on the sale.

The bond offering allows Morgan Stanley to squeeze out some of the equity in the $1.16 billion it paid the city of Chicago for the lease in February 2009. At the time, the deal was capitalised entirely with equity. The bond offering will also not preclude Morgan Stanley from issuing additional senior debt for acquisitions and sale-leaseback transactions, Standard & Poor’s said in its report.

The transaction represents a reversal of fortunes for Chicago Parking Meters, which had tried, and failed, to sell $500 million of bonds in July. At the time, a Morgan Stanley spokesperson said the bond issue had to be postponed “due to unfavourable market conditions”.