The class of projects that will experience difficulty raising capital are toll roads that carry patronage risk - traffic forecasts are a concern (with or without adverse capital market conditions) and there are two implications:
● The IPO option is not a feasible method of raising equity at present
● The IPO model is flawed (regardless of other factors) because it focuses investors on short-term pricing risk rather than the long-term return characteristics of this asset class and requires asset churn to meet short-term market expectations
● Lenders will not support toll road projects with patronage risk unless the overall transactional risk profile is lowered - leverage is reduced, coverage ratios are robust and the state shares patronage risk.