Maturité des financements et contrats de partenariats public-privé : les enjeux du refinancement à mi-parcours / Bridging the maturity gap: the refinancing of PPP contracts

The affordability of public-private partnership contracts mostly depends on the level of their annual financial charge. Therefore, high interest rates and short duration of the loans can outweigh the savings of bundling design, building and operation in the same contract. In order to match the durations of contract and loan, we assume that a refinancing allows for bridging the gap between the initial loan and the end of the contract. As the future cost of refinancing is unknown when signing the contract, we investigate the value for money of refinancing risk borne either by the private sector or by the purchasing authority. We conclude that in operation intensive public-private partnerships, a shorter contract has little effect on the value for money of the project. Conversely, in capital-intensive projects, a risk-adverse purchasing authority should rather choose contracts transferring the refinancing risk to the private sector.