Moody's lowers BBI's ratings
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Babcock & Brown Infrastructure (BBI) | 11:57 am, Thursday 20 November 2008 | BBI | 0.000 |
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Sydney, November 19, 2008 -- Moody's Investors Service has today downgraded the corporate family rating of Babcock & Brown Infrastructure Group ("BBI") to Ba2 from Ba1. At the same time, the senior secured rating has been downgraded to Ba3 from Ba2. Both ratings are on review for further possible downgrade. "The ratings downgrade reflects increased concerns surrounding liquidity risk which has been exacerbated by the very challenging capital markets", says Ian ChanChong, Vice President and Senior Analyst. "BBI's near term cashflow needs remain challenging, including payments relating to certain investments, as well as maturing debt, ChanChong says, adding "The absence of committed available facilities, combined with the tight capital markets has significantly constrained BBI's liquidity profile to a level that is no longer consistent with its previous ratings".
While Moody's acknowledges the diversity of BBI's assets and measures undertaken by BBI to date (including recently announced 50% sale of Powerco and the retention of operating cashflow), today's ratings downgrade reflects concerns that fund raising from asset sales may not be completed in a timely manner to meet the calls on cash over the near term.
The review focuses on BBI's plans to alleviate its liquidity challenges, including asset sales, debt raising, or refinancing plans. The ratings could decline rapidly if material progress on these issues is not made in the next few weeks.
The outlook could return to stable if the company makes further progress in its liquidity management including its planned asset sales. In addition, the change in the rating outlook to stable would incorporate the company's future strategy and liquidity policy. BBI, based in Sydney, is a listed infrastructure fund which owns a series of infrastructure assets in Australia and abroad.
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