During the GFC, the availability of finance reduced dramatically. The cost of debt increased and tenors (the time over which the debt is to be repaid) reduced. This significantly affected refinancing opportunities for existing Partnerships Victoria projects, and changed the nature of the debt finance arrangements for new projects.
The kind of opportunistic refinancing undertaken prior to the GFC disappeared, as it was no longer possible to obtain new finance on more favourable terms than the existing finance for these projects.
Partnerships Victoria projects continued to need to refinance their short-term debt, but had to do so in a less favourable market.
New projects could only secure short-term debt, which would have to be refinanced during the life of the project. Hence the financing structures for these projects assumes there will be a number of refinancing events over the project's life. The difficulty in raising debt was exacerbated by heightened perceptions of refinancing risk. In some projects, the government party provided carefully targeted support to mitigate elements of the refinancing risk for the private party. During this period, the contractual provisions concerning refinancing were customised to the needs of the particular project.