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Rating Action:

Moody's assigns (P) Baa1 to I-4 Mobility Partners' senior construction and subordinate TIFIA loans

21 Aug 2014

Approximately $1.432 Billion of Debt Securities Affected

New York, August 21, 2014 -- Moody's Investors Service, ("Moody's") has assigned a provisional (P) Baa1 rating to I-4 Mobility Partners' (borrower) $483 million senior construction bank loan, $131 million of short term Tranche A TIFIA loans, and $818 million of long term Tranche B TIFIA loans. The loans will fund the reconstruction and expansion of a 21 mile segment of Interstate 4 through Orlando, FL including adding 2 managed lanes in each direction. The project is being procured under an availability-payment based public-private partnership (PPP) agreement with payments being made by the State of Florida (GO rated Aa1 stable). The total project costs, inclusive of $2.32 billion of construction costs, will also be funded with $1.7 billion of government capital payments, $688 million of which are paid at or shortly after Final Acceptance, from the Florida Department of Transportation (FDOT) and $103 million of equity. The rating is based on information provided to Moody's as of August 18, 2014. Upon review of substantially final documents and verification that there have been no material changes to the project documents as reviewed to date, Moody's will assign a final rating. The outlook is stable.

RATINGS RATIONALE

The parity rating of (P) Baa1 for the senior lien construction loan as well as the short term and long term TIFIA loans is based on our understanding that failure to achieve substantial completion before project deadlines is an event of default and causes TIFIA to spring to parity with the senior lien construction loan. Only the long-term TIFIA loan is projected to be outstanding after final acceptance payments are made by the government following construction completion.

The ratings reflect the construction risk of the Project, given operations are less complex with adequate financial cushion and a manageable performance regime. During construction, the ratings consider the financial strength of the construction DBJV (Skanska-Granite-Lane) with significant combined experience on similar projects in central Florida as well as completing projects under a public-private partnership (PPP) framework. While the project is quite large in scale, with severe construction constraints in some areas, the required construction means and methods are relatively straightforward and widely used. The DBJV's approach to the Project includes a detailed phasing plan that divides the project into four independent segments, allowing for reallocation of crews in case one segment falls behind schedule. The DBJV traffic management plan and schedule adequately incorporates the need to keep existing lanes open during construction. The Project also benefits from many front-end activities already completed by FDOT, including environmental permitting, right-of-way acquisition and clearing.

The large amount of government contributions during construction are considered neutral given they are paid out according to dates rather than actual performance, except for the Final Acceptance payments. While the termination provisions include a rectification cost component, which is more heavily felt by lenders if there is a termination during construction, we view the termination risk as low given the DBJV's experience and financial strength, as well as the construction security package. The fixed dates at which funds are made available has resulted in a proposed construction schedule that is slower than the DBJV would otherwise have proposed. The float in the schedule, introduced to match the government payments during construction, strengthens the credit by introducing schedule capacity to make up any unforeseen delays in later construction periods.

The construction security package benefits from DBJV parent company guarantees on a joint and several basis up to 40% of the contract price, the large payment and performance bonds ($750 million each) required in the project agreement, and $30 million of retainage to backstop DBJV liquidated damages (LDs) payable to the concessionaire. While the DBJV retainage is weaker than other forms of liquid security, liquid security is funded over the first 12 months of the Project and available through Project completion. Additionally, the retainage account can be increased 12 months ahead of substantial completion if it appears that the contractor will not meet the deadline. The flexible debt repayment structure is also a key rating driver given no principal payment is due until the earlier of substantial completion or August 2023, which is more than two and a half years post the projected substantial completion. This requires a lower level of liquidity to fund any delays that occur.

The methodologies used in this rating were Construction Risk in Privately-Financed Public Infrastructure (PFI/PPP/P3) Projects published in April 2014, and Operating Risk in Privately-Financed Public Infrastructure (PFI/PPP/P3) Projects published in December 2007. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

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Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Earl Heffintrayer
Asst Vice President - Analyst
Project Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Chee Mee Hu
MD - Project Finance
Project Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns (P) Baa1 to I-4 Mobility Partners' senior construction and subordinate TIFIA loans
No Related Data.
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