New Zealand

Details

  • Service: Advisory, Corporate Finance, Infrastructure Financing
  • Type: Business and industry issue
  • Date: 15/07/2009

Financing Australian PPPs 

The current problems that bidders and governments face in obtaining sufficient private debt finance for PPP projects have no simple answers.

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However, governments can take some practical measures to help. These measures include:

 

  • accepting a lower level of financing commitment in bids, instead of the
    traditional Australian model of requiring underwritten commitments of financefor a period of 6 months or more
  • taking measures to facilitate maximum competition for debt finance, whichmay involve a funding competition after appointing a preferred bidder
  • for larger projects (over $500 – 1,000 million), being willing to provide eithercapital grants, where such are appropriate and do not dominate the project’s financing, or debt finance on a pari passu basis with banks (capital grants may not be appropriate for the largest projects – those over $1 billion)
  • investigating further the credit guaranteed finance or counter-indemnity models as possible ways of increasing market capacity and reducing funding cost. Under these models, the government either provides the finance or effectively guarantees it, but benefits from a guarantee of project risks
  • the Commonwealth increasing its guarantee to cover states’ long-term PPP obligations.

 

 

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