Airport rule changes will benefit BAA
THE government yesterday watered down proposed new solvency rules for big airports, making it easier for Spanish-owned BAA – which runs Heathrow and Gatwick – to raise funds.
Plans have been dropped for a special administration regime to ensure airports stay open even if their operators go bust, which would have meant investors in airport infrastructure would be able to demand higher rates.
The plans would also have meant a hike in the cost of financing development projects.
The costs would have been a struggle for BAA, whose bond ratings were at risk of a downgrade if the original plan had been introduced, as it struggles with a £10bn debt mountain.
“The government has concluded that the implementation costs of introducing Special Administration would outweigh the benefits, and could significantly restrict airport operators’ ability to commit to ongoing investment in the airport infrastructure,” the Department of Transport (DoT) said yesterday.
Macquarie Equities Research said yesterday the government’s move was “an extremely important de-risking event”.
BAA, which is controlled by Spanish builder Ferrovial, said the change would make it easier to complete the planned refurbishment of Heathrow airport.
Standard & Poor’s warned last month that the insolvency regime could trigger a “multi-notch downgrade” of BAA’s bonds.
FAST FACTS BAA
&9679; BAA risked its bonds being downgraded because bondholders’ ability to claim control of airport assets might have been restricted.
&9679; The government says the cons of the plans now outweigh the benefits.