The Issuer is a special purpose company that in September 2007 signed a project agreement with the Salford Royal NHS Foundation Trust (the "Trust"), whereby it agreed to redevelop the existing Hope Hospital site in Salford, Greater Manchester, and to provide certain hard facilities management ("FM") services for a period running until June 2042 (the "Project").

RATINGS RATIONALE

"Today's upgrade reflects the successful completion of construction works on 20 August 2012, the prompt resolution of construction snagging items and the satisfactory service performance to date of the hard facilities management services," explains Declan O'Brien, an Analyst in Moody's Infrastructure Finance Group.

The Baa2 rating reflects as positives (1) The Issuer's long-term Private Finance Initiative (PFI) contract with the Trust to redevelop and then provide FM services at the Hope Hospital in Salford, Greater Manchester; (2) the solid credit strength of the Trust; (3) the successful construction of the hospital, including the prompt resolution of snagging items; (4) a stable revenue stream under the project agreement which is guaranteed by the Secretary of State for Health pursuant to a deed of safeguard; (5) the satisfactory performance to date of FM services, and the relatively straightforward nature of operation and maintenance works; (6) a range of creditor protections included within the Issuer's financing structure, such as debt service and maintenance reserves; (6) the Issuer's robust debt service coverage ratios; and (7) our expectation that there is a high likelihood of recovery for lenders following any default by the Issuer. The rating is, however, constrained by (8) the Project's high leverage, which reduces the Project's ability to withstand unexpected stress; and (9) the Project's limited operating history.

The Bonds benefit from an unconditional and irrevocable guarantee of scheduled principal and interest from Ambac Assurance (UK) Ltd ("Ambac"). However, on 7 April 2011, Moody's ratings on Ambac were withdrawn and accordingly the Baa2 rating reflects the credit quality of the Project on a stand-alone basis.

WHAT COULD CHANGE THE RATINGS UP/DOWN

Moody's could consider upgrading the rating as the Project transitions further to steady-state operations, and demonstrates a longer successful operating history. Conversely, Moody's could consider downgrading the rating if lifecycle cost assumptions were to prove inadequate, or if poor service delivery or a deterioration in the Issuer's relationship with the Trust were to increase the possibility of a default under the project agreement.

The Issuer is a 50/50 joint venture between Balfour Beatty Infrastructure Investments Limited ("BBIIL") and InfraRed (Infrastructure) Capital Partners Limited as general partner for InfraRed Infrastructure Fund II. BBIIL is a wholly owned subsidiary of Balfour Beatty plc.

The principal methodology used in this rating is Operating Risk in Privately-Financed Public Infrastructure (PFI/PPP/P3) Projects published in December 2007. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

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Declan O'Brien Analyst Infrastructure Finance Moody's Investors Service Espana, S.A. Calle Principe de Vergara, 131, 6 Planta Madrid 28002 Spain JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Neil Griffiths-Lambeth Senior Vice President Infrastructure Finance JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Investors Service Espana, S.A. Calle Principe de Vergara, 131, 6 Planta Madrid 28002 Spain JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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