Robert Bain: Is it time to revisit PPP ratings?

Publication Date
01 February 2011

This article by infrastructure investment analyst Robert Bain suggests that we may need to reassess the credit quality of UK public–private partnerships.

In the past PPP projects have attracted low investment-grade ratings. The transactions were specifically structured with this rating target in sight for economic reasons, including possible credit substitution by the (once thriving) monoline insurance industry. On a standalone basis, few break through the ‘BBB’ ceiling into ‘A’ territory (and none go above it).

However, given that this is a mature, resilient sector characterized by low volatility, government support over successive regimes and few defaults, it may be time for a reassessment.