UL ECONOMIST Dr Anthony Leddin, warns that charges at the Limerick Tunnel must be adjusted immediately after the loans advanced for the project were downgraded for the second time in a month. Traffic flow through the €660 million tunnel has fallen well short of expectations. Ratings agency Standards & Poors, say the tunnel will remain on State aid for the duration of the 35-year private management concession.
A month after the long-term loan for the Tunnel was downgraded by ratings agency Moodys, it has now been downgraded by Standard & Poors.
“Anyone holding these bonds will have experienced a significant capital loss, but because of the agreement with the NRA, there is still a yield from the investment,” said Dr Leddin.
“It is all based on the capital flows and perceived traffic flows. If the economy improves in the region and you get a couple of companies exporting through Rosslare, it will improve dramatically”.
Agency Moody’s downgraded the debt from Baa3 to Baa2 because traffic was below the agreed minimum.
This week Standard & Poors downgraded the senior debt from BB+ to BBB- and placed it on “CreditWatch negative”.
Toll revenues are substantially lower than forecast and the project is heavily reliant on the guarantee from the NRA, with already hard pressed taxpayers making up the shortfall.
Eoin Gavin, head of the Irish Road Haulage Association, claimed to the Limerick Post that the €660m Limerick tunnel was not value for money.
He said that 90% of truck drivers are not using it because of the €5.80 charge, and which would need to be dropped by €1.50 to become more economical for them than travelling through the city.
