03 Project Finance and Transport News

Peterborough (Progress Health) Bonds Upgraded To ‘BB’ On Signed Standstill Agreement; Spanish Motorway Project Sociedad Concesionaria Autovia de la Plata Assigned Preliminary ‘BBB’ Rating; ‘BBB-’ Ratings Affirmed On Consort Healthcare; Underlying Rating On Octagon Bonds Is Raised To ‘BBB’

04Utility News

Electricité de France Outlook Revised To Neg-ative On Heightened Exposure To Unregulated Activities; Danish Integrated Power And Gas Company DONG Energy Proposed Subordinat-ed Hybrid Notes Rated ‘BB+’; Outlook Revised To Negative For Italian Gas Utility Edison After Similar Action On Parent EDF; France-Based Power Project Exeltium’s Refinancing Debt Assigned Preliminary ‘BBB’ Rating

05 Utility News

Spanish Diversified Utility Company Iberdrola Outlook Revised To Positive On Expected Stronger Metrics; Integrated Utility Enel Outlook Revised To Positive On Expected Improvements Of Credit Metrics; U.K.-Based Scottish Power Ltd. Outlook Revised To Positive On Similar Action On Parent; Vier Gas Transport (OGE) ‘A-/A-2’ Ratings Affirmed On Expected Sound Performance

06Market Watchbox

Infrastructure Bond Issue; Ratings Watchbox; Rated New Issuance EMEA; Utility Markets

INFRASTRUCTURE FINANCE

OUTLOOKJune 2015

Boosting Runway Capacity At Heathrow Or Gatwick Airports Relies On Shareholder SupportStandard & Poor’s Credit Analyst Olli Rouhiainen examines how the project to construct a new airport runway in the U.K. relies on shareholder support – which will be a key factor for the credit ratios during the runway’s construction phase

The steadily increasing number of passengers travelling to and from south-east England has prompted the U.K. government to examine the options of increasing runway capacity at Gatwick and Heathrow airports. Consequently, the Airport Commission is currently assessing the implications of such an expansion and is due to report back its findings to Parliament in mid-2015. Currently, there are three options are under consideration: extending an existing runway at Heathrow, building a new runway at Heathrow, or building a new runway at Gatwick.

A number of uncertainties exist at present, particularly with regard to the location and cost of the runway, and how the financing will be structured. In our view, construction of a new runway could be financed in a way that would be neutral for the financial ratios of the two companies involved – Heathrow Airport and Gatwick Airport.

We base this view on the fact that there will be sufficient passenger demand to achieve high utilization of the new runway. However, the project will be costly. We therefore consider shareholder support to be a key factor for the credit ratios during the runway construction phases – a view which has been voiced by both airports. We would also expect shareholders to maintain compliance with the structural elements of their respective financing vehicles – Heathrow Funding and Gatwick Funding – during the investment period. In our view, the new runway would be difficult to finance without strong equity backing due to the size and complexity of the project.

The three expansion options involve investments ranging from about £8 billion if the new runway is built at Gatwick, to about £20 billion if it’s built at Heathrow. Construction is unlikely to start before 2019, and is currently scheduled for completion in 2025. While such a large investment will likely result in an increase in debt at the airport that builds additional capacity, we believe this could

be financed by the companies without affecting their credit ratios.

Both airports raise debt through their financing vehicles – Heathrow Funding and Gatwick Funding – which we rate under our corporate securitization criteria. We have analyzed the impact that the runway expansion proposals would have on Heathrow and Gatwick airports’, and by looking at the financial ratios we have assumed that there are no material developments on the companies’ debt structures as a result.

Current Issue Ratings Do Not Incorporate New CapacityWe do not currently incorporate the new runway investment in our credit analysis of either Heathrow or Gatwick. This is mainly because of the major uncertainties surrounding whether or not such investment will go ahead, when it might go ahead, which location option would be chosen, and what would be the estimated duration and cost of construction. Since construction of a new runway is unlikely to start until 2019, other considerations also include potential changes to the U.K. aviation industry between now and the start of construction, together with possible regulatory developments. Of particular importance is the extent to which airport assets are regulated, and how the Civil Aviation Authority (CAA) would wish the construction costs to be reflected in an airport’s regulated asset base (RAB) and in airport charges.

In our view, the decision of the CAA as to whether it allows the cost of the runway project to be added to the selected airport’s RAB during construction is crucial to the feasibility of financing the additional runway. Historically, the CAA has allowed major projects to be funded this way, including Heathrow Terminals 2 and 5.

In our base scenario, we forecast that passenger numbers at Heathrow and Gatwick will reach about 125 million by

Infrastructure Happenings Tuesday 2nd June 2015TXF Paris 2015: Project, Export & Agency Finance, ParisMichael Wilkins speakingwww.txfnews.com Thursday 4th June 2015IPFA European Infrastructure & Energy Finance Forum, AmsterdamMichael Wilkins speakingwww.ipfa.org Wedensday 10th June 2015IJ Global European Transport and PPP Leadership Forum 2015, AmsterdamMichael Wilkins speakingwww.ijglobal.com Thursday 18th June 2015HSH Nordbank Infrastructure Day, HamburgMichael Wilkins speakingwww.hsh-nordbank.com

Please contact Sonia Bassi at sonia.bassi@standardandpoors.com for information on all S&P events

“The three expansion options involve investments ranging from about £8 billion if the new runway is built at Gatwick, to about £15 billion if it is built at Heathrow…” Continued on page 2...

2 STANDARD & POOR’S RATINGS SERVICES INFRASTRUCTURE FINANCE OUTLOOK JUNE 2015

GATWICK AND HEATHROW RUNWAY CAPACITY

2024 (see chart). We base this figure on our long-term average GDP growth projection for the U.K. of about 2.5% per year, the significant growth in the population of south-east England, and a net increase in migrants to the U.K. who would have a higher propensity to travel. That means that, in our view, the remaining London airports (London City, Luton, Southend, and Stansted) will be at full capacity during peak hours. Our analysis incorporates the capacity constraints at both Gatwick and Heathrow, and we believe the underlying demand could be higher. Therefore, we anticipate a rapid take-up of new landing slots at either airport following the completion of the proposed new runway.

In our view, the downside scenario for both airports’ financial ratios would be limited by their respective financing documentation currently in place if the debt was financed inside the current financing structures, which should stop payments to shareholders if conditions turn out to be worse than anticipated.

Funding Needs Are Manageable, But Liquidity Risks Call For Careful PlanningIn our base scenario we see Heathrow having to raise a significant amount of new debt – about £15 billion of additional finance, plus the refinancing of about £6 billion-£6.5 billion of existing debt – between 2019 and 2027. This would total more than the current debt of Heathrow, although it represents less of an increase than for Gatwick in percentage terms. Heathrow has a well-established program for debt issuance, having already issued in several countries and in six currencies. On average, this would equate to about £1.6 billion-£1.8 billion of debt financing per year, compared with about £2 billion on average issued between 2009 and 2013. Therefore, we consider the volume of debt issuance would be manageable and, as long as it is well-spread between investors, should not lead to concentration issues.

Gatwick currently has £600 million of debt maturing between 2019 and 2025. Our base scenario envisages further debt requirements of between £2 billion and £2.5 billion. The additional debt is more than Gatwick’s debt outstanding on September 30th, 2014. However, in our scenario the new debt is spread over several years and therefore could be accommodated with reasonably sized issuances of about £300 million-£500 million per year – a figure below the average issuance made by U.K. airports in the past few years. That said, Gatwick may need to broaden its investor base outside the U.K. to avoid concentration risk.

We See Four Major Threats To The ProjectAlthough there are a number of uncertainties surrounding this project, we consider the major risks to be:• An increase in the cost of financing. Both Heathrow and

Gatwick currently benefit from low interest rates. However, a runway project could be at risk should there be a significant increase in rates during the peak construction period when the need for external debt is at its greatest, especially if higher interest rates are matched with lower-than-anticipated inflation.

• An overrun of capital expenditures. While Heathrow has a good track record in handling major infrastructure projects (Terminals 2 and 5, for example), we believe the plans for a third runway are more challenging due to the scope of the works involved. In addition to building the runway and additional terminal capacity, these works would involve construction changes to the M25 motorway.

Gatwick’s plans, coupled with the space available around the airport, give us somewhat less concern that there would be a material delay or cost overrun on the project. Although Gatwick has less experience than Heathrow in major construction programs, we anticipate that the company would obtain the necessary experience from U.K. construction companies familiar with such works.

• Opening the new runway during a recession. We view this risk to be less pronounced for Heathrow than Gatwick. Although Heathrow passenger volumes would be impacted if the new runway were opened during an economic downturn, the airport should be less affected than Gatwick due to the fact that it already has a number of airlines in the pipeline that are hoping to start flying from it.

We view the opening of a new runway during a downturn as a greater risk for Gatwick. This is because passenger volumes have historically been more volatile at Gatwick during downturns, and we believe the airport might find it difficult to attract new traffic at levels sufficient to maintain its financial ratios post construction.

• Airport costs that deter airlines and passengers. Under our base scenario, airport tariffs at Heathrow would increase significantly from levels that are already the highest in Europe, which could make the airport less attractive for airlines and passengers. However, because the other London airports would be full or nearly full by the time the construction of the new runway is completed, we do not anticipate a material number of airlines moving away from the airport.

How Gatwick Could Benefit From A Second RunwayIn our view, a new runway at Gatwick is likely to draw about 5 million-6 million passengers from other London airports. These passengers would not only come from Heathrow, but also from, London City, Luton, Southend, and Stansted airports. We would expect the impact on Heathrow relatively limited if passenger numbers grow in line with our current projections

Spiking A New Runway Could Crimp U.K. Air Travel In The Long TermThe option of not building a new runway at either Heathrow or Gatwick would be credit-supportive in the medium term, since Heathrow and Gatwick would become capacity constrained, thereby improving the resilience of both airports.

Over the longer term, however, we believe there could be negative developments for the U.K. airports business if runway capacity was not added in south-east England. This is because we would anticipate more international travel (mainly transfer passengers) moving to other European hubs, which could lower the number of high value long-haul customers travelling via Heathrow.

Further information is available on the Global Credit Portal in the research piece entitled: “Shareholder Support Will Be Crucial In Boosting Runway Capacity At Heathrow Or Gatwick Airports”

“… the decision of the CAA as to whether it allows the cost of the runway project to be added to the selected airport’s RAB during construction is crucial to the feasibility of financing the additional runway”

…continued from page 1

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20

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2023

2015

2014

2016

2017

2018

2019

2020

2021

2022

Gatwick Heathrow

2024

Source: Standard & Poor’s forecast

TOTAL PASSENGER VOLUME IN S&P BASE SCENARIO

CONSORT HEALTHCARE (BIRMINGHAM) FUNDING PLC

‘BBB-’ Ratings Affirmed On Consort Healthcare A rapid resolution of the Remedial Plan Trigger Event expected

Standard & Poor’s has affirmed its ‘BBB-’ long-term debt ratings and its stable outlook on the £400 million index-linked senior secured bonds and the £250 million senior secured European Investment Bank (EIB; AAA/Stable/A-1+) index-linked and fixed-rate loans issued by U.K.-based special-purpose vehicle Consort Healthcare (Birmingham) Funding PLC (ProjectCo).

ProjectCo entered into a 40-year project agreement with University Hospital Birmingham Foundation Trust (UHBFT), and Birmingham and Solihull Mental Health National Health Service Foundation Trust (BSMHFT) on June 14th, 2006, under a U.K. government private finance initiative.

Since then, there has been a gradual increase in service failure points, which has breached the service termination thresholds at the facilities management and project agreement levels. This constitutes a Remedial Plan Trigger Event under the collateral deed. As a result, ProjectCo has produced a remedial plan that is currently being considered by the controlling creditors.

S&P’s Luisina Berberian says: “The affirmation of the rating reflects S&P’s view that the Remedial Plan Trigger Event will be quickly resolved following improved relations between UHBT, Cofely (the FM provider), and ProjectCo.”

Further information is available on the Global Credit Portal in the research piece entitled: “Consort Health-care (Birmingham) Funding ‘BBB-’ Ratings Affirmed After Trigger Event; Outlook Stable”

Underlying Rating On Octagon Bonds Raised To ‘BBB’The annual debt service coverage ratio is forecast to average 1.48x

Standard & Poor’s has raised its underlying rating (SPUR) on the £341.33 million senior secured index-linked bonds issued by U.K.-based special-purpose vehicle Octagon Healthcare Funding PLC (OHF) to ‘BBB’ from ‘BB+’.

OHF has recently entered into a contractual undertaking to maintain a minimum annual debt service coverage ratio (ADSCR; as defined under the collateral deed) of 1.20x and a minimum cash balance of £1 million. OHF and Assured Guaranty (Europe) Limited (AGE) have agreed to amend the collateral deed to capture these changes.

S&P’s Michael Wilkins comments: “The stable outlook on the SPUR reflects S&P’s view that the project will continue to deliver good operational performance with minimal deductions.”

Further information is available on the Global Credit Portal in the research piece entitled: “Octagon Health-care Senior Secured Bonds Underlying Rating Raised To ‘BBB’; Outlook Stable”

“Although there are minor ongoing works, S&P considers that construction is no longer a material risk…”

PETERBOROUGH (PROGRESS HEALTH) PLC

Peterborough (Progress Health) Bonds Upgraded To ‘BB’ On Signed Standstill AgreementStable outlook reflects Standard & Poor’s forecast that no more deductions will take place and the rectification works will be completed within the standstill period

On April 29th, Peterborough (Progress Health) PLC (ProjectCo), which operates three building units on two hospital sites in Peterborough in the U.K., entered into a standstill agreement with the Peterborough and Stamford Hospitals NHS Foundation Trust. The agreement, which relates to outstanding fire compartmentation issues, limits the Trust’s entitlement to apply deductions and award service failure points to the project during the period in which it is in force. As a result of the signing of the agreement, ProjectCo will once again receive full project revenues while the dispute is investigated.

Consequently, on May 19th, Standard & Poor’s raised the long-term issue ratings on the £446.1 million fixed-rate bonds and liquidity facilities issued by ProjectCo to ‘BB’ from ‘B-’. At the same time, S&P removed the ratings from CreditWatch with developing implications; the outlook is stable. This outlook reflects S&P’s expectation that, under its base case scenario, no more deductions will take place and the rectification works will be completed within the standstill period.

The upgrade reflects the reinstatement

of full project revenues and the improvement in project liquidity following the signing of the standstill agreement. Previously, the Trust made three payment deductions, amounting to £6.4 million. The full amount was ultimately passed down to the construction contractor, which fulfilled payment notices issued by ProjectCo in late March and April totaling £5.3 million, and to the hard facilities management (FM) services provider, whose monthly fees were withheld by ProjectCo. A dispute resolution process is likely to be initiated in the coming weeks.

S&P’s Maria Lemos adds: “The volatile relationship between ProjectCo and the Trust could be detrimental for the long-term stability of project performance. As a result, S&P has revised downwards its operations phase business assessment, reflecting our worsening overall view of the project’s relative cash flow variability.”

Further information is available on the Global Credit Portal in the research piece entitled: “Peterborough (Progress Health) Bonds Upgraded To ‘BB’ On Signed Standstill Agreement; Off CreditWatch; Outlook Stable”

SOCIEDAD CONCESIONARIA AUTOVIA DE LA PLATA S.A.

Spanish Motorway Project Sociedad Concesionaria Autovia de la Plata Assigned Preliminary ‘BBB’ RatingThe rating is capped by the rating on the Kingdom of Spain, which is considered an irreplaceable counterparty

Spain-based limited-purpose entity Sociedad Concesionaria Autovia de la Plata S.A. (ProjectCo) will issue €186 million fixed-rate senior secured bonds due 2041. ProjectCo will use the proceeds to finance the construction, operation, and maintenance of a 49km section of the A-66 motorway between Benavente and Zamora in the north-west of Spain. In response, Standard & Poor’s has assigned its preliminary ‘BBB’ long-term rating to the bonds. The preliminary rating is capped by the revenue counterparty dependency assessment on the Kingdom of Spain (BBB/Stable/A-2). The outlook on the rating is stable and final ratings will depend upon receipt, and satisfactory review, of all final transaction documentation, including legal opinions.

The construction task, which started in July 2013, has been subcontracted to a construction joint venture comprising Ferrovial Agroman S.A. and Acciona Infraestructuras S.A., both joint and severally liable. Although there are still some minor ongoing works, S&P considers that construction is no longer a material risk to the transaction.

In addition, S&P considers the granting authority to be an irreplaceable

counterparty that will remain important throughout the project’s life. This is because the total funds that ProjectCo will receive will be sourced from the availability payment received from the authority.

S&P’s Michael Wilkins comments: “The rating is currently constrained by the sovereign credit rating on Spain, which is significantly below the level of the project’s preliminary operations phase stand-alone credit profile. We expect the rating on Spain to continue to constrain the credit rating on the project in the long term.”

Further information is available on the Global Credit Portal in the research piece entitled: “Spanish Motorway Project Sociedad Concesionaria Autovia de la Plata Assigned Preliminary ‘BBB’ Rating; Outlook Stable”

“The total deductions made by the Trust amount to £6.4 million. The full amount was ultimately passed down to the construction contractor…”

JUNE 2015 INFRASTRUCTURE FINANCE OUTLOOK STANDARD & POOR’S RATINGS SERVICES 3

OCTAGON HEALTHCARE FUNDING PLC

EDISON

Outlook Revised To Negative for Italian Gas Utility Edison After Similar Action On Parent EDFHighly strategic subsidiary Edison is one notch below the rating on the group credit profile of EDF

Following Standard & Poor’s revision on French power company Electricite de France S.A.’s (EDF) group credit profile (GCP) to ‘a-’ from ‘a’, and an outlook revision to negative from stable, S&P is revising its outlook on EDF’s subsidiary, Italy-based utility company Edison, to negative from stable. S&P is also affirming Edison’s ‘BBB+/A-2’ long-term ratings.

S&P’s Pierre Georges comments: “The negative outlook on Edison reflects the outlook revisions on EDF, indicating that S&P could lower the ratings on Edison if EDF’s GCP deteriorates to ‘bbb+’.”

The assessment of Edison as “highly strategic” to EDF reflects the fact that, although Edison does not carry its parent’s name, it acts as EDF’s gas division, is fully integrated into the group, and depends on EDF strategically, managerially, and financially.

Further information is available on the Global Credit Portal in the research piece entitled: “Italian Gas Util-ity Edison Outlook Revised To Negative After Similar Action On Parent EDF; ‘BBB+/A-2’ Ratings Affirmed”

France-Based Power Project Exeltium’s Refinancing Debt Assigned Preliminary ‘BBB’ RatingThe outlook is stable for proposed financing, which will fully refinance 2010 senior debt

Standard & Poor’s has assigned its preliminary ‘BBB’ long-term rating to the €1.435 billion senior secured bank loan issued by France-based Exeltium S.A.S. The outlook is stable.

Virtual power project Exeltium S.A.S’ senior secured €1.435 billion refinancing facility is a new financing structure with no refinancing risk and minimum to average annual debt service coverage ratios.

The proposed financing will fully refinance all existing senior debt raised in 2010. The new facility will fully amortize by June 2030, leaving a four-year tail until the end of the current project agreement.

S&P’s Karim Nassif explains: “The proposed financing will include structural features, such as an automatic price decline mechanism, as well as a put option, which covers 51% of the volume sold in order to mitigate the risk of an opt-out.”

Further information is available on the Global Credit Portal in the research piece entitled: “France-Based Power Project Exeltium’s Refinancing Debt Assigned Preliminary ‘BBB’ Rating; Outlook Stable”

“…no impact on DONG Energy’s other hybrid instruments, such as the €500 million and €700 million notes issued in 2013…”

DONG ENERGY

Danish Integrated Power And Gas Company DONG Energy Proposed Subordinated Hybrid Notes Rated ‘BB+’Hybrid remains a permanent feature in the capital structure as DONG replaces securities issued a decade ago

Standard & Poor’s has assigned its ‘BB+’ issue rating to the long-dated, optionally deferrable, and subordinated hybrid capital notes to be issued by Danish integrated power and gas company utility DONG Energy A/S (BBB+/Stable/A-2).

The proceeds of the junior subordinated hybrid notes – with a proposed maturity date in November 3015 – will be used to replace DONG Energy’s outstanding €600 million hybrid securities, issued in 2005, on their first call date on June 29, 2015. S&P treats this call date as the securities’ effective maturity date, and has therefore reassessed their equity content to “minimal” from “intermediate” due to the lack of permanence. However, the new issuance of the 2005 securities have no impact on DONG Energy’s other hybrid instruments, such as the €500 million and €700 million notes issued in 2013, which are assessed as having “intermediate” equity content.

S&P’s Alf Stenqvist comments: “DONG Energy is committed to maintaining hybrid securities as a permanent feature in its capital structure. Furthermore, treating the new securities

as replacement capital, S&P forecasts that DONG Energy’s total hybrid securities will be lower than 15% of its capitalization.”

S&P arrives at its ‘BB+’ issue rating on the proposed notes by notching down from its ‘bbb’ assessment of DONG Energy’s stand-alone credit profile (SACP), according to its hybrid capital criteria. The two-notch differential reflects the deduction of:

• One notch for subordination, as S&P’s long-term corporate credit rating on DONG Energy is investment grade (that is, higher than ‘BB+’); and

• An additional notch for payment flexibility, reflecting the fact that the deferral of interest is optional.

This assessment incorporates S&P’s view that there is a relatively low likelihood that DONG Energy would defer interest. Should that view change, S&P may increase the number of notches it deducts from the SACP assessment to derive the rating on the proposed notes.

Further information is available on the Global Credit Portal in the research piece entitled: “Danish Integrat-ed Power And Gas Company DONG Energy Proposed Subordinated Hybrid Notes Rated ‘BB+’”

4 STANDARD & POOR’S RATINGS SERVICES INFRASTRUCTURE FINANCE OUTLOOK JUNE 2015

ELECTRICITE DE FRANCE (EDF)

Electricité de France Outlook Revised To Negative On Heightened Exposure To Unregulated ActivitiesFrance’s rapidly changing regulatory and competitive landscape has a negative impact on EDF’s market positions and defensive profile

The rapidly changing regulatory and competitive landscape for Electricité de France’s (EDF’s) domestic activities is taking a toll on the group’s strong market position and defensive profile. Standard & Poor’s Pierre Georges says: “This comes at a time of high investment needs, and we believe EDF’s stretched credit metrics and negative discretionary cash flows weigh on its credit quality.”

However, there is a high likelihood that the French government would provide timely and sufficient extraordinary support to EDF in the event of financial distress. Therefore, S&P has revised its outlook on EDF to “negative” from “stable” at the same time as affirming its ‘A+/A-1’ long- and short-term corporate credit ratings.

The negative outlook reflects the potential unfavorable developments that could stress EDF in the future, including declining power prices and a possible transaction with nuclear services provider Areva. Additionally, EDF’s sizable investment plans, which include massive maintenance and upgrade expenditures on the existing nuclear fleet and new nuclear builds in France, weigh on the company’s financial flexibility and risk profile. The negative outlook also reflects

the same outlook on France.In addition, S&P has lowered its long-

term corporate credit ratings on EDF’s U.K. subsidiaries EDF Energy PLC and EDF Energy Customers PLC to ‘A-’ from ‘A’. S&P has also lowered its long-term counterparty credit and financial strength ratings on EDF’s captive insurance subsidiary, Wagram Insurance Co. Ltd., to ‘A-’ from ‘A’. The outlooks on these three entities are negative. The issue rating on the junior subordinated hybrid securities issued by EDF was lowered to ‘BBB’ from ‘BBB+’.

Lastly, S&P has revised down its assessment of EDF’s stand-alone credit profile (SACP) to ‘a-’ from ‘a’. The weaker SACP reflects the view that EDF will operate in a new paradigm, with significantly increased exposure to unregulated power activities. This comes as a result of the terminations of green and yellow regulated tariffs (applied to small and midsize enterprises and industrials, respectively) in France at end-2015.

Further information is available on the Global Credit Portal in the research piece entitled: “Electricite de France Outlook Revised To Neg On Heightened Exposure To Unregulated Activities; ‘A+/A-1’ Ratings Affirmed”

“The weaker SACP reflects the view that EDF will operate in a new paradigm…”

EXELTIUM

SCOTTISH POWER LTD.

U.K.-Based Scottish Power Ltd. Outlook Revised To Positive On Similar Action On ParentThis “core” subsidiary of Iberdrola group is rated at the same level as its parent

Standard & Poor’s has affirmed its corporate credit ratings on U.K.-based electricity and gas utility company Scottish Power Ltd., and its related entities, at ‘BBB/A-2’. The outlook has been revised from stable to positive. S&P also affirmed the senior unsecured issue ratings at ‘BBB’.

The rating actions on Scottish Power reflect similar actions on its parent, Spain-based utility company Iberdrola S.A, to which Scottish Power contributed 25% of the consolidated EBITDA in 2014. S&P views Scottish Power as “core” to the Iberdrola group.

The view of Scottish Power’s high importance to its parent is underpinned by Iberdrola’s strategic plan for the period 2014-16.

S&P’s Pierre Georges comments: “S&P views the unregulated power and gas business as having “moderately high” risk due to competition and price volatility. ”

Further information is available on the Global Credit Portal in the research piece entitled: “U.K.-Based Scot-tish Power Ltd. Outlook Revised To Positive On Similar Action On Parent; ‘BBB/A-2’ Ratings Affirmed”

Vier Gas Transport (OGE) ‘A-/A-2’ Ratings Affirmed On Expected Sound PerformanceGas transmission system operator will maintain sound performance over the next two to three years

Standard & Poor’s has affirmed its ‘A-’ long-term and ‘A-2’ short-term corporate credit ratings on Germany-based gas transmission system operator Open Grid Europe Group (OGE), comprising of Vier Gas Transport GmbH and OGE GmbH. The stable outlook reflects S&P’s opinion that OGE will maintain credit metrics commensurate with its ratings, owing to the group’s low-risk, fully regulated operations and stable cash flows.

S&P’s Tobias Buechler says: “The affirmation incorporates S&P’s view that OGE will maintain its “excellent” business risk profile, supported by its natural monopoly in gas transmission.

Indeed, S&P assesses OGE’s liquidity as “strong”, but OGE’s profitability can be more volatile than its peers’ over the short term. Therefore, S&P expects that OGE will remain exclusively focused on its core business as the leading gas transmission operator in its service area, maintain its high level of operating efficiency and reliability.

Further information is available on the Global Credit Portal in the research piece entitled: “Vier Gas Transport (Open Grid Europe Group) ‘A-/A-2’ Ratings Affirmed On Expected Sound Performance; Outlook Stable”

IBERDROLA

Spanish Diversified Utility Company Iberdrola Outlook Revised To Positive On Expected Stronger MetricsOutlook revision reflects the group’s improving risk profile; a result of improved domestic markets and reduced debt

Spain-based vertically integrated power group Iberdrola has followed its plan to deleverage and reduce its exposure to Spain, and increase contributions from regulated or quasi-regulated activities.

Standard & Poor’s believes Iberdrola is well positioned to capture growth opportunities abroad and achieve adjusted funds from operations to debt of more than 20% over the next two years. Consequently, S&P has revised its outlook to positive from stable on Iberdrola S.A. and its subsidiary Iberdrola USA.

If Iberdrola maintains its financial discipline and its credit metrics improve as expected there is the possibility of an upgrade in the coming quarters.

S&P’s Pierre Georges says: “The outlook revision reflects the group’s improving risk profile, in light of the increase in regulated or quasi-regulated activities in favourable jurisdictions, abating risks in the domestic market, and financial discipline that has led to continuous debt reduction.”

These favorable trends have improved S&P’s visibility on Iberdrola’s earnings, and it anticipates stronger, sustainable

credit metrics from 2015. In addition, S&P took into account the group’s ability to capture growth opportunities in key markets outside Spain and the perception of above-average generation assets, skewed toward a low variable-cost generation mix, with renewables and large hydro assets.

S&P continues to assess Iberdrola’s business risk profile as “strong”, owing to its large scale high exposure to regulated activities, successful geographic expansion into attractive regulatory frameworks, and its broadly diversified business portfolio.

Further information is available on the Global Credit Portal in the research piece entitled: “Spanish Diver-sified Utility Iberdrola Outlook Revised To Positive On Expected Stronger Metrics; Affirmed At ‘BBB/A-2’”

“In addition, S&P took into account the group’s ability to capture growth opportunities in key markets outside Spain…”

JUNE 2015 INFRASTRUCTURE FINANCE OUTLOOK STANDARD & POOR’S RATINGS SERVICES 5

VIER GAS TRANSPORT ENEL SPA

Integrated Utility Enel Outlook Revised To Positive On Expected Improvements Of Credit MetricsIntegrated Italian utility proves to be exceptionally resilient to adverse challenges

Italy-based integrated utility Enel’s effective deleveraging strategy and strategic refocusing are supporting improvements in their credit metrics over the rating horizon for 2015-17. Therefore, Standard & Poor’s is revising its outlook on Enel, and its main subsidiary Endesa, from stable to positive.

In addition, S&P is affirming its ‘BBB/A-2’ long- and short-term corporate credit ratings on both.

S&P’s Vittoria Ferraris comments: “The positive outlook reflects S&P’s assumption that Enel’s credit metrics will strengthen, particularly with adjusted funds from operations to debt exceeding 20%.”

The previous projection of adjusted funds from operations was approximately 18%. However, S&P believes that the group has been exceptionally resilient to the adverse economic and regulatory challenges in its two main mature markets, Italy and Spain. Enel’s resilience is due to the variety of available strategic options enabling the company to capture growth opportunities and to deleverage in a challenging environment.

These options include its asset disposal strategy, the rationalization of operating costs, the flexibility on capital expenditure, and the optimization of its debt and cash management. As a result,

S&P views Enel’s business risk profile as “strong”.

Enel’s recently unveiled business plan leverages on the group’s geographical spread, which enables it to pursue growth opportunities in economically dynamic areas, such as Latin America, and to maintain solid market positions in mature markets through efficiency gains.

The concentration of Enel’s investment plan on regulated and quasi-regulated businesses provides visibility on future earnings growth, which are considered supportive for the ratings. S&P observes a normalization of the regulatory environment in Spain where the group’s main subsidiary Endesa holds dominant positions in a market characterized by improving economic perspectives.

Further information is available on the Global Credit Portal in the research piece entitled: “Integrated Utility Enel Outlook Revised To Positive On Expected Improvements Of Credit Metrics; Affirmed At ‘BBB/A-2’”

“…Enel’s credit metrics will strengthen, particularly with adjusted funds from operations to debt exceeding 20%”

6 STANDARD & POOR’S RATINGS SERVICES INFRASTRUCTURE FINANCE OUTLOOK JUNE 2015

MARKET WATCHBOX RATED NEW ISSUANCE

STANDARD & POOR’S INFRASTRUCURE RATINGS WATCHBOX

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May-13

Jun-13Jul-13Aug-13Sep-13Oct-13Nov-13Dec-13Jan-14

Non Investment Grade Investment Grade

Rated New Issuance: EMEA Infrastructure Sector (May 2013 - May 2015)

Mar-14

Apr-14M

ay-14

Jul-14Aug-14Sep-14

Nov-14

Feb-15M

ar-15Apr-15M

ay-15

Utilities CreditsApril-15 Red Electrica Corporacion S.A. BBB+/Stable/A-2 BBB/Positive/A-2 Rating upgraded on improved regulatory conditions and more favorable economic and financial environmentRWE AG BBB+/Negative/A-2 BBB+/Stable/A-2 Outlook Revised To Negative On Adverse Market ConditionsOman Electricity Transmission Co. BBB+ (prelim)/Stable/-- NR prelim New ratingPublic Power Corp. S.A. CCC+/Watch Neg/-- B-/Watch Neg/-- Lowered To ‘CCC+’ And Kept On CreditWatch Negative On Increased Liquidity RiskMay-15 Iberdrola S.A. BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Expected Stronger MetricsScottish Power Energy Networks Holdings Ltd. BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.AScottish Power Ltd. BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.AScottish Power U.K. Holdings Ltd. BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.ASP Manweb PLC BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.ASP Transmission Ltd. BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.ASP Distribution PLC BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.AScottish Power Generation Ltd. BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.AScottish Power Energy Retail Ltd. BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.AScottish Power Investments Ltd. BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.AScottish Power Energy Management Ltd. BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.AScottish Power U.K. PLC BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Iberdrola S.ADubai Electricity and Water Authority BBB/Positive/-- BBB/Stable/-- Outlook Revised To Positive On Stronger Credit MetricsEnel SpA BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Expected Improvements Of Credit MetricsEndesa S.A. BBB/Positive/A-2 BBB/Stable/A-2 Outlook Revised To Positive On Similar Action On Parent Enel SpAElectricite de France S.A. A+/Negative/A-1 A+/Stable/A-1 Outlook Revised To Neg On Heightened Exposure To Unregulated ActivitiesEDF Energy Customers PLC A-/Negative/-- A/Negative/-- Rating Revised To A- After Outlook Revision On Parent Electricite de France S.A.EDF Energy PLC A-/Negative/-- A/Negative/-- Rating Revised To A- After Outlook Revision On Parent Electricite de France S.A.Edison SpA BBB+/Negative/A-2 BBB+/Stable/A-2 Outlook Revised To Negative After Similar Action On Parent Electricite de France S.A.

April-15 PSBP NW ProjectCo Ltd BBB-/Stable NR prelim New ratingAggregator Vehicle PLC NR prelim A-(prelim)/Stable Prelim rating withdrawnAggregator Vehicle PLC A-/Stable NR prelim New ratingHigh Speed Rail Finance 1 PLC A/Stable A/Watch Neg Tap issuance to existing 1.566% index-linked bond due 2038 Exeltium SAS BBB (Prelim)/Stable - Exeltium’s Refinancing Debt Assigned Preliminary ‘BBB’ RatingFlughafen Zurich AG A+/Stable/-- A/Stable/-- Upgraded On Expectation Of Sustained Financial ProfileEllaktor S.A. B/Negative/B B+/Watch Neg/B Ratings After Rating Action On GreeceTouax S.C.A. NR B/Stable/-- Rating withdrawn at the Issuer’s requestAvanza Spain S.A.U B/Watch Neg/-- B/Stable/-- Placed On CreditWatch Negative Pending Completion Of Tender OfferFar-Eastern Shipping Co. PLC CC/Negative/-- B/Negative/-- Downgraded On Cash Buyback OfferTNT Express N.V. BBB/Stable -- BBB+/Stable-- Downgraded On Weaker Business ProfileLemtrans LLC CCC-/Negative/-- CCC/Negative/-- Downgraded On Doubts Of Withstanding Sovereign DefaultComboios de Portugal E.P.E BB/Positive/-- BB/Stable/-- Outlook Revised To Positive After Similar Action On PortugalTouax S.C.A. B/Stable/-- NR New rating assignedMay-15 Peterborough (Progress Health) PLC BB/Stable B-/Watch Dev Signed standstill agreement relating to outstanding fire compartmentation issuesBreeze Finance S.A. B-/Stable B/Stable Termination of commutation agreement between monoline insurer and Class A bondholdersSociedad Concesionaria Autovia de la Plata S.A. BBB(prelim)/Stable - New rating Norges Statsbaner AS AA-/Negative/A-1+ AA-/Stable/A-1+ Outlook Revised To Negative On Norwegian Railway ReformFar-Eastern Shipping Co. PLC SD/-- CC/Negative/-- Rating Lowered On Completion Of Cash Buyback OfferTurk Hava Yollari A.O. BB/Stable/-- BB+/Negative/-- Rating Lowered Following Downgrade Of TurkeyNobina AB B/Positive/-- B/Stable/-- Outlook Revised To Positive On Potential Improvement In Financial PolicyLogwin AG BB-/Stable/-- B+/Positive/-- Upgraded On Strong Operating Performance And Credit MetricsPostNL N.V. BBB-/Positive/A-3 BBB-/Stable/A-3 Outlook Revised To Positive On Strong Metrics And Potential Sale Of TNT Express Stake

Project Finance & Transportation Credits

S&P LT 5yr CDS 1mth 3mth 2012-2014 S&P Market FCR Rating Borrower Country (bp) (r bp) (r bp) High Low Derived Signals*

Issue Date Issuer Country Issue Ratings (S&P) Currency Amount (m) Maturity/Tenor Coupon (%)

21-Apr-15 Gas Natural Fenosa Finance B.V. Netherlands BB+ Euro 500 Variable/Fixed22-Apr-15 United Utilities Water Finance PLC United Kingdom BBB+ Pound Sterling 35 23-Apr-30 0.1822-Apr-15 United Utilities Water Finance PLC United Kingdom BBB+ Pound Sterling 25 23-Apr-25 0.0122-Apr-15 United Utilities Water Finance PLC United Kingdom BBB+ Euro 52 27-Apr-27 1.1322-Apr-15 NET4GAS s.r.o. Czech Republic BBB Euro 50 28-Jul-26 023-Apr-15 Avinor AS Norway AA- Euro 300 29-Apr-25 128-Apr-15 Infra Foch SAS France BBB Euro 200 16-Apr-25 2.1329-Apr-15 DONG Energy A/S Denmark BB+ Euro 600 06-Nov-15 31-May-15 Paternoster Holding IV GmbH Germany B Euro 195 07-Apr-22 Floating1-May-15 Paternoster Holding IV GmbH Germany B Euro 65 07-Apr-21 Variable1-May-15 Paternoster Holding III GmbH Germany CCC+ Euro 225 15-Feb-23 8.508-May-15 Fortum Varme Holding samagt med Stockholms stad (publ), AB Sweden BBB+ Swedish Krona 1,500 18-May-22 1.758-May-15 Fortum Varme Holding samagt med Stockholms stad (publ), AB Sweden BBB+ Swedish Krona 1,000 18-May-21 Floating11-May-15 Sociedad Concesionaria Autovia de la Plata S.A. Spain BBBprelim Euro 185 31-Dec-41 3.1711-May-15 Autoroutes Paris-Rhin-Rhone S.A. France BBB+ Euro 1,800 18-Feb-22 Floating20-May-15 Avation Capital S.A. Luxembourg B- US Dollar 100 27-May-20 7.5020-May-15 VistaJet Malta Finance P.L.C. Malta B-prelim US Dollar 300 NoneSource: Standard & Poor’s, Bloomberg, 26 May 2015

A+/A-1/Negative EDF S.A. France 56 0 6 104 46 bbb+BBB+/A-2/negative RWE A.G. Germany 73 4 -3 110 54 bbbA/A-1/Stable GDF Suez S.A. France 46 1 5 106 38 a-BBB/A-2/Positive ENEL SpA Italy 82 1 14 273 61 bbbBB+/B/Positive Energias de Portugal S.A. Portugal 121 3 23 428 87 bbb-BBB/A-2/Positive Iberdrola S.A. Spain 76 8 11 231 57 bbbBBB-/NR/Stable United Utilities PLC UK 87 0 -5 183 84 bbb-BBB+/A-2/negative Edison SpA Italy 40 0 -1 79 38 aNR International Power UK 68 1 -2 85 43 aSource: Standard & Poor’s, Bloomberg, 26 May 2015

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Blaise GanguinManaging DirectorRegional Practice Leader EMEACorporate & Infrastructure Ratingsblaise.ganguin@standardandpoors.comTel: (33) 1 4420 6698

Peter TuvingManaging DirectorLead Analytical ManagerCorporate & Infrastructure Ratingspeter.tuving@standardandpoors.comTel: (46) 8 440 59 13

Robin BurnettSenior DirectorAnalytical ManagerProject Financerobin.burnett@standardandpoors.comTel: (44) 20-7176 7019

Trevor PritchardManaging DirectorAnalytical ManagerUtilitiestrevor.pritchard@standardandpoors.comTel: (44) 20-7176 3737

Stuart ClementsSenior DirectorAnalytical ManagerTransportation/Corporate Securitizationstuart.clements@standardandpoors.comTel: (44) 20-7176 7012

Peter KernanManaging DirectorCorporate Criteria Officer EMEApeter.kernan@standardandpoors.comTel: (44) 20-7176 3618

Michael WilkinsManaging DirectorInfrastructure Financemike.wilkins@standardandpoors.comTel: (44) 20-7176 3528

Sandra PereiraSenior Director Client Business ManagementInfrastructure Financesandra.pereira@standardandpoors.comTel: (44) 20-7176 3746

Claude ChaubetDirectorHead of Market Engagement EMEAclaude.chaubet@standardandpoors.comTel: (44) 20-7176 3689

Sonia BassiMarketing and Investor RelationsInfrastructure Financesonia.bassi@standardandpoors.comTel: (44) 20-7176 3956

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