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Customising for the converted
01 July 2005
US PPP will require financings that are capable of competing with tax-exempt bonds. Credit-enhancement and using available tax benefits could be the answer to lowering costs. By Betty Cerini, Junaid Chida, and Sean Moran, partners at Dewey Ballantine.
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[PPP]
[infrastructure finance]
[editor]
[project finance]
[BOT]
Several recent high profile infrastructure transactions – the Chicago Skyway financing and the mandating of development rights to Cintra for the Trans-Texas Corridor – have focused attention on the use of public-private-partnerships (PPPs) as a viable means of developing and financing infrastructure projects in the US.
Nevertheless, PPPs still represent a small portion of the infrastructure projects that are currently in development across the US. Traditionally, US infrastructure has been developed and financed by governmental authorities by way of issuing tax-exempt bonds, raising taxes, and creating revenue funds – and that is only just beginning to change.
Recently, a number of factors, including ballooning budget deficits and staggering debt burdens, have caused many States to move away from the traditional financing methods and explore the use of PPPs to supplement their infrastructure development programs.
For example, Governor Pataki of New York recently expressed support for exploring initiatives that use PPPs to...
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