Rail finance—financier considerations
Produced in partnership with Bryan Cave Leighton Paisner LLP
Rail finance—financier considerations

The following Banking & Finance practice note produced in partnership with Bryan Cave Leighton Paisner LLP provides comprehensive and up to date legal information covering:

  • Rail finance—financier considerations
  • Asset risk
  • Residual value risk
  • Asset damage or destruction risk
  • Manufacturer risk
  • Construction phase risks
  • Post-acceptance risks
  • Credit risk
  • Lessor risk
  • Credit risk
  • More...

Following privatisation, new passenger rolling stock was typically financed by the three original bank-owned rolling stock companies (ROSCOs) using financing made available by their bank owners. The three original ROSCOs—Angel Trains, Eversholt Rail Group and Porterbrook Leasing—were established at the time of privatisation. After a series of changes of ownership they were subsequently acquired by banks. The Royal Bank of Scotland acquired Angel Trains, HSBC acquired Eversholt Rail Group and Abbey National (subsequently Santander) acquired Porterbrook Leasing. The companies were later sold by the banks to various investors between 2008 and 2010.

As a result of the disposal of the ROSCOs by their bank owners and new rolling stock lessors and financiers entering the market, passenger rolling stock lessors have more recently had to finance the purchase of rolling stock from the wider debt and capital markets.

This Practice Note outlines some of the key risks that a financier will take into account when considering whether to provide financing for the acquisition of new UK passenger rolling stock.

For the purposes of this Practice Note, it is assumed that:

  1. the rolling stock will be purchased by a lessor and leased to a franchised passenger train operator using the rolling stock procurement structures described in Practice Notes: Rail finance—bi-partite and tri-partite purchase agreements and Rail finance—leasing and maintenance arrangements, and

  2. third party financiers will provide debt finance to

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