Government remains committed to the use of long-term financing for long-term projects. Long-term bank debt markets remain constrained. The cost of long-term borrowing for infrastructure projects has increased sharply and the availability of long-term bank debt has materially diminished. While banks continue to offer short-term loans, Government does not believe that the refinancing risk represents value for money in Government backed projects. PF2 will: • retain the benefits of private finance project due diligence by seeking finance from a wider range of long-term debt and equity sources; • enable banks to play an important role in the financing of PF2 projects, whether through long-term loans or products to support institutional investment, including construction guarantees or mezzanine facilities providing credit enhancement; and • encourage the use and assessment of a range of debt financing sources including public and private bonds, commercial bank debt and multilateral debt products. |