Moody’s Ratings Service: Governments Can Benefit From P3s

Investment ratings firm Moody’s Investors Service issued a report last month in which it found that governments have plenty of capacity to handle the financial obligations that come with public-private partnerships (P3s or PPPs). “Funding for PPP projects is often spread over a long period of time.

“Fiscal commitments are often small in scale relative to the size of a government’s balance sheet and revenue sources,” said Kathrin Heitmann, an analyst with Moody’s Project Finance and Infrastructure unit.

While nations like the United Kingdom, Canada and Australia have a lot of experience conducting P3s and have even developed secondary and refinancing markets to support P3s, the United States market for the financing mechanism is relatively untapped. The country’s tradition of financing large infrastructure projects through the municipal bond market has made the need for P3s less urgent, according to Moody’s.

But the report suggested that stable governments with strong credit ratings – such as the United States – could stand to benefit from an increase in their use.

This article originally published by Strategic Partnerships Inc.