Few companies prepared to talk
on the record about state of market.


The rail finance market in the UK is
still in an uncertain position, according to those in the know.

Few companies are willing to speak on the
record about their activities and much is affected by rumour and
conjecture, but the consensus seems to be that, by and large,
lessors in the UK are not in as strong a position as their
counterparts in continental Europe.

Part of the reason for this, according to a
number of sources, is related to the possibility that there will be
no investment in new rolling stock for the foreseeable future –
meaning the three roscos (Porterbrook, Angel, HSBC Rail) remain
safe, but there may be little room for new players to enter the

One source said: “People who own trains right
now are in a very strong position. If they don’t increase in value,
then they will depreciate much more slowly than it was thought.

“People who bought roscos got a very good deal
out of it.”

Indeed, big hitters like SMBC – a senior lender
on several rolling stock deals, although not a rosco itself – and
Porterbrook have enjoyed the support of solid foundations

SMBC Leasing (UK), for example, owns 50% of QW
Rail Leasing Ltd, which in turn owns the Class 378 fleet leased to
London Overground – consisting of a total of 54 four-car electric
multiple units (EMUs), used on the North and East London

They are maintained by Bombardier
Transportation and operated by London Overground Rail Operations

The trains operate on the existing set of
routes that make up the North London Line and alsothe newly
refurbished East London Line, which includes four new stations.

And as for Porterbrook, on 9 June this year, it
successfully issued two sterling bonds with a value of £520m
(€625m), the proceeds of which have been used to “prepay certain
senior term loans which Porterbrook entered into in 2008 following
its acquisition by the current owners, a consortium led by Deutsche

The initial dealers in respect of this
programme included Barclays Bank, BNP Paribas, Crédit Agricole CIB,
Lloyds TSB Bank and The Royal Bank of Scotland.

Senior lenders involved in the bank refinancing
included, among others, Abbey National Treasury Services,
Commonwealth Bank of Australia, Dexia Credit Local’s London branch,
and Lombard North Central.

The issue was rated BBB by Standard &

Porterbrook managing director Paul Francis
said: “Porterbrook management and shareholders are delighted to
have successfully issued sterling bonds in what have been difficult
market conditions.

“The bond issue secures long-term funding for a
sizable part of the business which allows the company to plan and
execute the long term strategy of developing its rolling stock

“The bond issue was executed professionally
and Porterbrook recognise the contribution made by all the dealers
and banks, as well as our advisers JPMorgan and Milbank.”