Morgan Stanley, banks lend BAA $2.7 bln to buy Budapest Airport

Morgan Stanley and three more banks agreed to provide BAA Plc €2.25 billion in loans to finance its purchase of Budapest's airport, the banks concerned announced. The lenders are ABN Amro Holding NV, Barclays Plc and the Royal Bank of Scotland Group Plc. London-based BAA, the world's largest airport operator, yesterday said it plans to repay the loan by selling bonds. BAA on Dec. 18 agreed to buy 75% of Hungary's largest airport from the Hungarian government in a deal financed by debt. The operator of London's Heathrow airport is buying Budapest's airport to benefit from passenger traffic in eastern Europe, which is growing faster than in the U.K. "We will refinance the loan with bonds when market conditions are right," said BAA spokesman Duncan Bonfield. "We have plenty of flexibility within the loan." The four banks don't plan to syndicate the loan to a wider group of lenders, bankers involved in the deal said. The loan initially has a one-year maturity. It can be extended annually for a final maturity of three years, BAA said. The interest margin and fees weren't disclosed.
The U.K. company's rating was yesterday lowered to Baa1, the third-lowest investment grade, from A3, Moody's said in a statement, adding that it doesn't expect to cut the rating again soon. Standard & Poor's said on Dec. 8, the day the Hungarian government picked BAA for exclusive talks on the purchase, that it plans to cut BAA's rating one level to A.