April 4 (The following statement was released by the rating agency)Fitch Ratings has placed Tube Lines (Finance) PLC's GBP77m class B notes due 2031 on Rating Watch Negative (RWN). The notes' current rating is 'AA+'. The rating action follows the placement of Transport for London's (TfL; 'AA+'/RWN) ratings on RWN (see 'Fitch Puts 1 UK Local Government, TfL & 3 Oxford Colleges on RWN', dated 27 March 2013, available at this site).
KEY RATING DRIVERS
The notes are credit-linked to TfL's ratings as they benefit from an irrevocable and unconditional guarantee from TfL. As such, Fitch considers that the only risk factor applicable to the rating is External Support, which was assessed as Stronger.
RATING SENSITIVITIES Given that TfL irrevocably and unconditionally guarantees the full discharge of Tube Line's debt service commitments, any change in TfL's rating would lead to a corresponding change in the notes' rating. The RWN on TfL's ratings indicates a heightened probability of downgrade in the near term. The transaction was originally a securitisation of the assets of Tube Lines Limited (TLL), which in December 2002 entered into a 30-year public private partnership contract with London Underground Limited to manage, renew and maintain the infrastructure on three London Underground lines (Jubilee, Northern and Piccadilly). TfL acquired TLL from Bechtel and Amey (Ferrovial) at end-June 2010 and subsequently simplified the financing structure.
U.S. President-elect Donald Trump has several options for disentangling himself from his business empire when he takes office next year, but legal experts say the only way fully to avoid conflicts of interest would be to sell his global holdings. Trump tweeted on Wednesday that he would unveil on Dec. 15 his plans for taking himself "completely out of business operations" before taking office on Jan. 20. Trump did not spell out his plans, but several ideas have started to gain prominence. U.S. Senator Ben Cardin, a Maryland Democrat, is pushing for a resolution requiring Trump to establish a blind trust under independent control to manage his holdings. However, a blind trust only works if the office holder does not know how the trustee has invested the money, legal experts said. Much of Trump's money is tied up in highly visible, illiquid investments such as luxury hotels and properties branded with his name, so he will still be aware of these holdings even if he puts someone else in charge of daily operations. Richard Painter, the chief ethics counsel to President George W. Bush, said a blind trust would not protect against some of the most dangerous conflicts from the Trump Organization holdings. Painter has urged Electoral College members to refuse to make Trump the next president unless he sells his business interests.
He said the organization's overseas real estate raises questions about the cost of security and whether that would be paid by U.S. taxpayers, foreign governments or the Trump Organization. The properties could also become a target for violence, potentially ensnaring the United States in a foreign conflict."A blind trust is a fairy tale in this context," said Stephen Gillers, a professor who specializes in ethics at New York University School of Law. CORPORATE MONITOR
New York Times columnist Andrew Ross Sorkin has touted the idea of appointing a corporate monitor, and suggested Kenneth Feinberg, who oversaw compensation funds for victims of the Sept. 11, 2001 attacks. Judges often appoint monitors to oversee court settlements. If a party violates the deal, the monitor can bring them back to court where they would face potential penalties imposed by the judge. However, any corporate monitor overseeing Trump's business would not have a judge's backing, only the threat of public embarrassment if Trump refused to cooperate. "That's bad for Trump, but it's not the same as having a judge instruct a party in court that unless you buckle up and do what I say you're back in court and I'll impose more dramatic sanctions," said Gillers.
Painter and Gillers said the best way to reduce potential conflicts would be a sale of the entire Trump Organization. Painter said Trump's children should also end their association with the business."What he needs to do is get to the place where Trump's interest in profit of any Trump entity is the same as my interest or your interest or the interest of the person on the street," said Gillers. That presents a new set of complications. A portfolio of real estate developments would usually consist of a large number of separate legal entities. "So, each one has to be sold individually. That's a pain," said Brian Quinn, a professor at the Boston College Law School. He said the sale would likely take a long time. Making matters worse, real estate developments often involve a building owner who contracts with someone like Trump to brand and manage the property. Quinn said those contracts derive their value from the Trump name."It won't be easy to do. He'll probably take a bath on the transactions," Quinn said. "But it's really the only way for him to go forward. Simply handing over day-to-day management of the businesses to his kids will not be enough."