While capital market financing may provide cheaper long-term refinancing for a project where the construction phase has been completed, it is difficult to finance PPP projects from the construction phase through the capital markets. This is because:
• the investors cannot price the construction risk that they would assume;
• the project company will pay interest on the anticipated construction costs that has not yet occurred (if the Project's construction is a large sum over a number of years, then this could amount to a considerable sum); and
• it is difficult to negotiate a deal that adequately protects the investors during the construction period while have the flexibility to deal with unexpected events.
Consequently, it is difficult to obtain finance through the issue of securities for a greenfield project. Nevertheless, governments that believe they have an infrastructure project with strong cash flow should consult their financial advisers regarding the possibility of securities issues.