BAA 7.15 bln pound loan launched

LONDON (Reuters) - The 7.15 billion pound loan that partly refinances the debt assumed by Spanish construction firm Ferrovial FER.MC and its partners' takeover of UK airports operator BAA was formally launched to investors on Friday.

The loan pays interest margins ranging from 100 basis points (bps) to 225 bps over LIBOR, compared with 100 bps on BAA's previous loan, and they are now linked to the amount of debt outstanding, banking sources said.

The margins will step down as the company repays its debt, some of which is expected to be funded by bond issues, the sources added.

The loan refinances the debt of London Heathrow, London Gatwick, London Stansted and the Heathrow Express rail link and will also be used to finance improvements and modernisation.

4.4 billion pounds of the loan refinances existing debt and 2.75 billion pound finances working capital and capital expenditure.

The 4.4 billion pound refinancing is structured as an infrastructure financing similar to other regulated utility securitisations with a facility A and facility B structure, bankers said.

The 3.4 billion pound facility A is ringfenced and expected to be rated A- by S&P and Fitch. It pays an initial margin of 175 bps which drops to 100 bps as it is refinanced.

The 1 billion pound facility B, which is expected to be rated BBB, pays an initial margin of 225 bps also dropping to 150 bps as it is refinanced.

There is also 2.75 billion pounds of capital expenditure and working capital financing paying margins initially tied to facility A and B margins, which fall if those facilities are repaid.