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Trains, planes and bond market deals

The transport system now rivals the weather as a topic of conversation among disgruntled Britons. So there was considerable interest in investor appetite when National Air Traffic Services (Nats), which runs air traffic control services in UK airspace, followed another transport-sector debutant, Network Rail, which maintains the UK rail infrastructure, to the bond markets this summer.

On August 11, Nats (En Route) issued £600 million ($960 million) of 5.25% guaranteed secured amortizing bonds due 2026.

In July, Network Rail launched a £4 billion Euro-commercial paper and US commercial paper programme.

Controversial life Like Network Rail, Nats has had a short and controversial life. It was created by a controversial PPP deal in 2001, which separated the Nats Group, which is part-owned by a consortium of commercial airlines, from the UK's Civil Aviation Authority (CAA).

Nats was highly leveraged, with four banks committed to lending it £1.6 billion, intending to syndicate the debt. Three months after it took over air traffic control, the 9/11 attacks slashed air traffic volumes over the UK and therefore Nats' revenues.

For over a year, Nats and its banks wrestled with a restructuring process that was completed on March 19 2003. The government and the British Airports Authority (BAA) put new equity into Nats, the banks accepted new covenants, and the CAA allowed Nats to increase its charges.


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