UK Private Finance Initiative Debt Market Sees 67% Surge in 2003

Strategic Insights -

The UK private finance initiative debt market experienced a significant surge in 2003, with the total debt rising by 67% to Pounds 8.2bn. This growth was driven by the increase in PFI and public-private partnership deals coming to fruition. According to figures from Thomson Financial Project Finance International, the PFI debt market expanded from Pounds 4.9bn in 2002 to Pounds 8.2bn last year.

Key Takeaways:

  • The PFI debt market rose by 67% in 2003, driven by the completion of projects in the government's efforts to involve the private sector in delivering public services.
  • Debt for refinancings tripled from Pounds 487m to Pounds 1.5bn, reflecting the number of projects signed in the late 1990s, which were now up and running and could be refinanced on more favourable terms.
  • Bond finance accounted for Pounds 3bn of the 2003 debt figure, indicating a shift towards bond finance for bigger or longer-term deals.
  • Royal Bank of Scotland led the market, followed by Barclays, as Barclays Capital and Barclays Bank, which used both bank and bond debt to finance PFI projects.
  • Debt raised for new projects rose from Pounds 4.4bn to Pounds 6.7bn, reflecting the completion of projects in various sectors, including the Ministry of Defence and National Air Traffic Services.
  • The Metronet consortium's contract to run part of London Underground, and the financing of the Skynet 5 PFI to deliver a satellite communication service to the Ministry of Defence, accounted for Pounds 3.2bn of PFI debt.
  • A further Pounds 900m was raised in the refinancing of National Air Traffic Services.
  • Rod Morrison, Director of Project Finance at Thomson Financial, predicted that refinancings would continue to play a significant role in the PFI debt market this year, with the expected Pounds 1.8bn refinancing of the Tubelines consortium.

Statistics:

  • Pounds 8.2bn: Total PFI debt in 2003, a 67% increase from Pounds 4.9bn in 2002.
  • Pounds 4.9bn: PFI debt in 2002, reflecting the base year for comparison.
  • Pounds 8.2bn: New record high for PFI debt, surpassing previous totals.
  • Pounds 3.2bn: Debt raised for the Metronet consortium's contract and Skynet 5 PFI.
  • Pounds 1.5bn: Tripling of refinancing debt from Pounds 487m in 2002.
  • Pounds 487m: Refinancing debt in 2002, which tripled to Pounds 1.5bn in 2003.
  • Pounds 6.7bn: Debt for new projects in 2003, a 52% increase from Pounds 4.4bn in 2002.
  • Pounds 1.6bn: Expected debt for Ministry of Defence accommodation projects in 2004.
  • Pounds 1.8bn: Expected refinancing of the Tubelines consortium in 2004.

Sources:

  • "UK private finance initiative debt market sees 67% surge in 2003" by Andrea Felsted.