Variables

Observations

Default Value/Range

Stage 2

Stage 1

25. Gearing

Represents the share of the total financing requirement which is funded by debt. For PFI waste projects, where the planning and technological risks are more acute, the level of Gearing is typically lower (and level of equity therefore higher) than for non waste PFI projects.

{85}%

{85}%

26. Sterling Swap Rate

The prevailing swap rates which should be used can be found under the "Currencies, Bonds & Interest Rates" section of the Financial Times or on Bloomberg. The assumed swap rate should be the one which corresponds closest to the tenor of the debt, typically either the 20 or 25 year swap rate.

N/A

N/A

27. Bank Margin

Given the higher risk profile of waste projects the bank margin is typically higher than for projects in other sectors.

{120} basis points

{120} basis points

28. Credit Spread

The credit spread reflects the (relatively low) credit strength of the project company. In the absence of any credit enhancement, an SPV's credit rating is typically in the order of BBB. Lenders charge a credit spread to compensate for the additional risk from lending to borrower with a low credit rating.

{10-15} basis points

{12} basis points