Media centre

Wednesday 25 Apr 2007

NETWORK RAIL LAUNCHES INDEX-LINKED BOND PROGRAMME

Region & Route:

National

Network Rail today launches a new programme of RPI index-linked bond issuance . The bonds will be issued under the Company’s debt issuance programme, (rated AAA, Aaa, AAA) and will be directly and unconditionally guaranteed by a financial indemnity from the UK Government. The first tranche of the programme will be launched in the week commencing 30 April, subject to market conditions, in benchmark size with a maturity of November 2037. This will be the first time any issuer other than the UK DMO has adopted a programme approach to Sterling index-linked bond issuance. Network Rail expects to issue at regular intervals and give advance guidance to the market on forthcoming supply. The programme is expected to comprise two or three large, liquid benchmarks with maturities of between 15 and 45 years. The programme represents a measured strategic move by Network Rail to an increased proportion of index linked issuance in its overall debt mix. Commenting on the programme Fred Maroudas, Network Rail’s Director of Funding, said: “This programme follows an extensive consultation exercise with investors, who have indicated substantial interest in a new programme of benchmark size index-linked issues which carry a Government guarantee.” “We expect to raise a total of £10bn in the capital markets over the next two years to finance new investment in the railway and to refinance our short term debt. Much of this could be index linked if investor demand remains strong”. “Index linked debt is a prudent, cost effective way of financing long-term public utilities like the railway. It provides value for money to the taxpayer and fare payer whilst giving investors such as pension funds the inflation linked assets they need to match their future liabilities”. “What investors are looking for is liquidity. That is why we have taken the decision, like the DMO, to adopt a programme approach, with regular, benchmark sized issuance. We have put together a strong group of eight market makers all of whom are also index-linked Gilt Edged Market Makers (“GEMMs”) and will be trading the bonds off their Gilts desks.” In accordance with normal market practice, Network Rail may undertake a risk management exercise in respect of any or all of its issuance in order to reduce possible disruption in the UK Gilt-edged market that might occur in relation to pre-marketing and / or book building of the bonds. – Ends – For more information please call: Bell Pottinger Corporate & Financial Stephen Benzikie 07740038929 Olly Scott 078 1234 5205