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Challenges in refinancing P3 debt in Canada

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The international investment community has flocked to Canadian shores over the last 10 years as a steady stream of project finance transactions have made it across the finishing line supported by the public sector. However, the financing of infrastructure deals has continually evolved presenting new risks and challenges, particularly with refinancing bank loans, and more specifically, the impact of a P3 refinancing on underlying interest rate swaps. Operis and JCRA have been at the forefront of such major trends in both infrastructure financing and the procurement of projects.

Since 2006, Operis has been active in the Canadian P3 sector working on more than 100 of the 250+ transactions completed. The largest to date was the Golden Ears Bridge, for which Operis provided due diligence and modelling advisory services. JCRA’s involvement in the region has been steadily increasing over the last decade and is now considered the leading capital markets advisor for the Canadian P3 sector.

The track record for bond financing P3 transactions in Canada has steadily increased over the last five years. As a result, pricing margins have come in from a high of roughly 400 basis points (bps) in 2009 to circa 190-250 bps in 2016; and while, historically, most bond financings were structured as club deals, underwritten deals are now gaining traction.

Operis and JCRA have teamed up to look into the challenges that face the Canadian secondary debt market for P3 transactions.

Download full report here.

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