A couple of infrastructure financings in New South Wales reliant on external support from sponsors or from monoline insurers are revealing shaky foundations.Redbank Project, a coal-fired power station in the Hunter Valley, has $170 million of July 2023 bonds outstanding. The bonds were wrapped by XL Capital Assurance. Standard & Poor's last week lowered the rating on the bonds issued by vehicle, RB Pass Through Pty Ltd., to 'CCC-' from 'CCC+' and left the ratings on Credit Watch with negative implications. The rating action reflects the continued operating difficulties at the Redbank power plant since October 2009, and uncertainty on the adequacy of the planned capital works to stabilise operations. These factors have increased the project's reliance on equity support and could exacerbate Redbank's weak liquidity position, said S&P.Parent company, Alinta Energy, has advised that it has reserved A$4.7 million in cash to undertake the improvement works at the Redbank power plant and expects to contribute this cash as equity during the 2010 calendar year, starting in the June 2010 quarter. In the absence of this undertaking, the risk to Redbank's credit quality would have been greater. If the planned equity contribution is delayed and the project has an increased reliance on the working capital or liquidity facility to support the works, the rating could fall.   Moody's concluded its review for possible downgrade of the ratings assigned to Reliance Rail Finance Pty Ltd., and lowered the senior debt ratings to 'Ba1' from 'Baa1' and subordinated debt ratings to 'Ba3' from 'Baa3'. The outlook on the ratings is negative. As had been previously flagged, Moody's said RRF - which is building new passenger trains for the CityRail network in NSW - could be exposed to a potential funding gap from early 2012 or higher funding costs or both, if monoline debt insurers, Syncora Guarantee Inc. and FGIC UK Limited, were to enter insolvency. The risk of a potential funding gap, which could be triggered by the insolvency of both monolines, arises from provisions in RRF's financing documents for its A$357 million bank facilities, which are required to be drawn from February 2012 in order to complete the project. Moody's went on to advise the ratings would be downgraded in the remaining delivery phase of the project in the event of the insolvency of one or both of FGIC and Syncora in the absence of appropriate third-party support. The ratings could also be downgraded if there is further evidence of delay in the delivery phase or if there is deterioration in the credit quality of Downer EDI, Hitachi Ltd., or the State of New South Wales.RRF has A$1.9 billion of credit-wrapped bonds outstanding in the domestic market with maturities ranging from September 2016 to December 2035. While the market would have been prepared for the downgrades, it is likely a three notch downgrade would have caught many by surprise. There may now be some forced selling of the senior bonds, given their fall below investment grade.