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How Banks Price Loans to Public-Private Partnerships: Evidence from the European Markets

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  • Frederic Blanc-Brude
  • Roger Strange

Abstract

This article presents the findings of a recent analysis of the drivers of credit spreads in project finance loans to public-private partnerships, or PPPs, an increasingly popular form of procurement worldwide. PPPs are project finance transactions in which project output is a function of government policy in fields such as health, transport, and education. Because of the controversy that now surrounds the use of private finance in PPPs, understanding the determinants of the cost of debt in such highly leveraged projects is of interest to policy makers as well as originators and participants in the transactions. 2007 Morgan Stanley.

Suggested Citation

  • Frederic Blanc-Brude & Roger Strange, 2007. "How Banks Price Loans to Public-Private Partnerships: Evidence from the European Markets," Journal of Applied Corporate Finance, Morgan Stanley, vol. 19(4), pages 94-106.
  • Handle: RePEc:bla:jacrfn:v:19:y:2007:i:4:p:94-106
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    Citations

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    Cited by:

    1. Chung, Demi & Hensher, David A. & Rose, John M., 2010. "Toward the betterment of risk allocation: Investigating risk perceptions of Australian stakeholder groups to public-private-partnership tollroad projects," Research in Transportation Economics, Elsevier, vol. 30(1), pages 43-58.
    2. Wouter Thierie & Lieven Moor, 2016. "The characteristics of infrastructure as an investment class," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 30(3), pages 277-297, August.
    3. João Pinto, 2014. "What is Project Finance?," Working Papers de Economia (Economics Working Papers) 01, Católica Porto Business School, Universidade Católica Portuguesa.
    4. João Pinto & Luís Pacheco & Paulo Alves & M. Ricardo Cunha, 2016. "How banks price loans in leveraged buy-outs: an empirical analysis of spreads determinants," Working Papers de Economia (Economics Working Papers) 04, Católica Porto Business School, Universidade Católica Portuguesa.
    5. João Pinto & Mário Coutinho dos Santos, 2014. "Corporate Financing Choices after the 2007-2008 Financial Crisis," Working Papers de Economia (Economics Working Papers) 03, Católica Porto Business School, Universidade Católica Portuguesa.
    6. Miranda Sarmento, J. & Renneboog, L.D.R., 2014. "Anatomy of Public-Private Partnerships : Their Creation, Financing, and Renegotiations," Discussion Paper 2014-017, Tilburg University, Center for Economic Research.
    7. Krzysztof Wasowski, 2013. "Analiza wspolpracy sektora publicznego z doradcami zewnetrznymi w realizacji projektow w systemie koncesyjnym oraz w formie partnerstwa publiczno-prywatnego w Polsce (Analysis of public sector coopera," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 11(43), pages 136-155.
    8. Oliveira, Matheus & Ribeiro, Joana & Macário, Rosário, 2016. "Are we planning investments to fail? Consequences of traffic forecast effects on PPP contracts: Portuguese and Brazilian cases," Research in Transportation Economics, Elsevier, vol. 59(C), pages 167-174.
    9. João Pinto & Manuel Marques & William Megginson, 2013. "A Comparative Analysis Of Ex Ante Credit Spreads: Structured Finance Versus Straight Debt Finance," Working Papers de Economia (Economics Working Papers) 05, Católica Porto Business School, Universidade Católica Portuguesa.
    10. Megginson, William L., 2010. "Introduction to the special issue on project finance," Review of Financial Economics, Elsevier, vol. 19(2), pages 47-48, April.
    11. Jakob Müllner, 2017. "International project finance: review and implications for international finance and international business," Management Review Quarterly, Springer;Vienna University of Economics and Business, vol. 67(2), pages 97-133, April.
    12. Pinto, João M. & Alves, Paulo P., 2016. "Project finance in Europe: An overview and discussion of key drivers," EIB Working Papers 2016/04, European Investment Bank (EIB).

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