3.1.9  Floating Rate Component

For Availability PPP Projects in Victoria, the State will generally propose to bear changes in base interest rate risks at the time the interest rate hedging that forms part of the original debt funding will expire (refer to section 2.42). This risk allocation is implemented through reimbursement by, or supplementation to, Project Co given its actual interest costs compared with rate assumptions at Financial Close. The Payment Schedule will set out the method for calculating the Floating Rate Component payable, noting this is payable separately to the Service Payment because it must match the timing of debt service commitments. The State will continue to fully transfer the risk of changes to credit margins and other elements of the debt financing following Financial Close.

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