Syncora Holdings Ltd. (fka SYCRF)

[InvestorPM]

RATINGS RATIONALE

"The positive outlook on RRF's ratings reflects our view of an increased likelihood of a successful refinancing, given supportive capital market conditions and the project's operating track record," says Spencer Ng, a Moody's Vice President and Senior Analyst.

RRF has around AUD1.1 billion of debt maturing between September 2018 and September 2019, representing nearly half of its total outstanding debt.

Moody's believes that recent debt raisings by the Australian infrastructure sector demonstrate the appetite in the capital markets for projects with solid operating track records, subject to the projects meeting minimum debt service coverage ratios.

Consequently, the State of New South Wales' (New South Wales Treasury Corporation, Aaa stable) commitment to infuse AUD175 million of new equity into Reliance Rail — subject to Reliance Rail refinancing below a stipulated credit spread — coupled with retained cash balances, provides RRF with the means to strengthen its capital structure.

"We believe RRF's expected debt reduction funded by the new equity and retained cash increases the likelihood of Reliance Rail being able to meet lenders' minimum required debt service coverage ratios," adds Ng.