Borrower Loan Amendments - LIBOR Transition

NOTICE OF AMENDMENTS to CERTain Borrower Loan Agreements in respect of LIBOR Transition

THIS NOTICE CONTAINS IMPORTANT INFORMATION OF INTEREST TO BONDHOLDERS

Heathrow Funding Limited

(incorporated with limited liability under the laws of Jersey)

(formerly BAA Funding Ltd)

 (the Issuer)

NOTICE IS HEREBY GIVEN pursuant to Clause 20.2 of the Bond Trust Deed dated 18 August 2008 (as supplemented from time to time) (the Bond Trust Deed) between the Issuer and the Bond Trustee in accordance with Condition 17 (Notices) that the following Borrower Loan Agreements (the Affected Borrower Loan Agreements) between the Issuer, Heathrow Airport Limited (the Borrower) and Deutsche Trustee Company Limited (the Borrower Security Trustee) have been amended under a master deed of amendment dated 10 December 2021 between the Issuer, the Borrower and the Borrower Security Trustee (the Deed of Amendment) to transition from Sterling LIBOR to SONIA:

1. Sub-Class A-27 Borrower Loan Agreement dated 23 May 2014 in respect of the €600,000,000 Sub-Class A-27 Bonds due 23 May 2024;

2. Sub-Class A-32 Borrower Loan Agreement dated 11 February 2015 in respect of the €750,000,000 Sub-Class A-32 Bonds due 11 February 2032;

3. Sub-Class A-33 Borrower Loan Agreement dated 1 April 2015 in respect of the NOK 1,000,000,000 Sub-Class A-33 Bonds due 1 October 2029;

4. Sub-Class A-34 Borrower Loan Agreement dated 21 May 2015 in respect of the CAD 500,000,000 Sub-Class A-34 Bonds due 21 May 2027;

5. Sub-Class A-35 Borrower Loan Agreement dated 17 February 2016 in respect of the CHF 400,000,000 Sub-Class A-35 Bonds due 17 May 2026;

6. Sub-Class A-36 Borrower Loan Agreement dated 7 December 2016 in respect of the NOK 1,000,000,000 Sub-Class A-36 Bonds due 7 December 2031;

7. Sub-Class A-42 Borrower Loan Agreement dated 30 August 2018 in respect of the CAD 400,000,000 Sub-Class A-42 Bonds due 4 September 2032;

8. Sub-Class A-43 Borrower Loan Agreement dated 11 October 2018 in respect of the AUD 175,000,000 Sub-Class A-43 Bonds due 11 October 2030;

9. Sub-Class A-44 Borrower Loan Agreement dated 11 March 2019 in respect of the €86,000,000 Sub-Class A-44 Bonds due 11 September 2041;

10. Sub-Class A-45 Borrower Loan Agreement dated 14 March 2019 in respect of the €650,000,000 Sub-Class A-45 Bonds due 14 March 2036;

11. Sub-Class A-46 Borrower Loan Agreement dated 15 April 2019 in respect of the CHF 210,000,000 Sub-Class A-46 Bonds due 15 October 2028; and

12. Sub-Class A-47 Borrower Loan Agreement dated 16 December 2019 in respect of the JPY 10,000,000,000 Sub-Class A-47 Bonds due 17 December 2041.

Capitalised terms used but not defined in this notice shall have the meaning given to them in the Master Definitions Agreement dated 18 August 2008 (as amended from time to time) between, among others, the Security Group Agent, the Issuer, the Borrower Security Trustee and the Bond Trustee.

Background

In 2017, the UK Financial Conduct Authority (the FCA) published a paper examining the effectiveness of the London Interbank Offered Rate (LIBOR) and proposing a transition to alternative reference rates. Following consultation with the working group established by the FCA and the Bank of England to consider sterling risk-free reference rates (the RFR Working Group), the Sterling Overnight Index Average (SONIA) benchmark was proposed as the RFR Working Group's preferred risk free rate (RFR) for wholesale sterling markets.

On 5 March 2021, the FCA announced the future cessation and loss of representativeness of all sterling LIBOR settings immediately after 31 December 2021. The Bank of England and the FCA have set out clear expectations for FCA regulated firms to remove their reliance on sterling LIBOR in all new business and in legacy contracts and to actively transition away from sterling LIBOR.

Amendments to Affected Borrower Loan Agreements

Scheduled payments due under certain Cross Currency Hedging Agreements and the Affected Borrower Loan Agreements are currently linked to sterling LIBOR and as a result, such agreements must be transitioned from sterling LIBOR to SONIA on or before 31 December 2021 to ensure that payments can continue to be made (both by and to the Issuer and, where applicable, the Borrower) in an orderly manner.

To transition its portfolio of Cross Currency Hedging Agreements to SONIA, the Issuer will adhere to the ISDA 2020 IBOR Fallbacks Protocol, published by ISDA to support the transition from LIBOR to SONIA in the derivatives market.

Accordingly, the Deed of Amendment has been executed by the Issuer, the Borrower (as Lender) and the Borrower Security Trustee implementing the transition of certain Cross Currency Hedging Agreements pursuant to the Protocol (i.e. those Cross Currency Hedging Agreements which hedge the currency risk in respect of issuances of Bonds which are denominated in currencies other than sterling and referenced in the Affected Borrower Loan Agreements), in order to make corresponding amendments to the applicable rates of interest under the Affected Borrower Loan Agreements to ensure that the cashflows between the Borrower and the Issuer (as Lender) under the Affected Borrower Loan Agreements continue to be matched with the scheduled payments between the Issuer and the Issuer Hedge Counterparties under the relevant Cross Currency Hedging Agreements. The Deed of Amendment will take effect from the later of 25 January 2022 or the date on which the Issuer adheres to the Protocol.

This announcement is made by Heathrow Funding Limited.

For investor enquiries please contact Tim Allen, Head of Debt Investor Relations and Corporate Finance, +44 7568 604 873

Dated: 13 December 2021