Buy back PPPs: An arbitrage opportunity
As Portugal is facing strong fiscal pressure, government spending on public-private partnerships (PPPs) in the road sector has become a main budgetary constraint. In this article, we show how the financial crisis has created a unique arbitrage opportunity that provides a solution to this problem. Si...
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| Format: | Elektronisch Buchkapitel |
| Sprache: | Englisch |
| Veröffentlicht: |
Paris
OECD Publishing
2013
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| Links: | https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq https://doi.org/10.1787/budget-12-5k47tb293czq |
| Zusammenfassung: | As Portugal is facing strong fiscal pressure, government spending on public-private partnerships (PPPs) in the road sector has become a main budgetary constraint. In this article, we show how the financial crisis has created a unique arbitrage opportunity that provides a solution to this problem. Since the private sector is in urgent need of liquidity, we suggest that the Portuguese government should use some of the bailout funds, borrowed at lower interest rates, to buy back the roads concessions, discounting future payments at the high interest rates currently charged to Portugal. For the roads already in operation, the purchase of the assets would significantly reduce future public payments and would also release money into banks and the economy. For the roads currently under construction, we propose that the government buys only the equity of these companies. That would also reduce future payments, and allow for the postponement or even cancelation of some of these projects, while granting private companies an exit from projects that they are no longer able to finance. This operation would save around half of PPP payments over the next 20 years |
| Umfang: | 1 Online-Ressource (14 Seiten) 21 x 28cm |
| DOI: | 10.1787/budget-12-5k47tb293czq |
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| 520 | |a As Portugal is facing strong fiscal pressure, government spending on public-private partnerships (PPPs) in the road sector has become a main budgetary constraint. In this article, we show how the financial crisis has created a unique arbitrage opportunity that provides a solution to this problem. Since the private sector is in urgent need of liquidity, we suggest that the Portuguese government should use some of the bailout funds, borrowed at lower interest rates, to buy back the roads concessions, discounting future payments at the high interest rates currently charged to Portugal. For the roads already in operation, the purchase of the assets would significantly reduce future public payments and would also release money into banks and the economy. For the roads currently under construction, we propose that the government buys only the equity of these companies. That would also reduce future payments, and allow for the postponement or even cancelation of some of these projects, while granting private companies an exit from projects that they are no longer able to finance. This operation would save around half of PPP payments over the next 20 years | ||
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| spelling | Miranda Sarmento, Joaquim Verfasser aut Buy back PPPs An arbitrage opportunity Joaquim Miranda Sarmento and Ricardo Ferreira Reis Paris OECD Publishing 2013 1 Online-Ressource (14 Seiten) 21 x 28cm txt rdacontent c rdamedia cr rdacarrier As Portugal is facing strong fiscal pressure, government spending on public-private partnerships (PPPs) in the road sector has become a main budgetary constraint. In this article, we show how the financial crisis has created a unique arbitrage opportunity that provides a solution to this problem. Since the private sector is in urgent need of liquidity, we suggest that the Portuguese government should use some of the bailout funds, borrowed at lower interest rates, to buy back the roads concessions, discounting future payments at the high interest rates currently charged to Portugal. For the roads already in operation, the purchase of the assets would significantly reduce future public payments and would also release money into banks and the economy. For the roads currently under construction, we propose that the government buys only the equity of these companies. That would also reduce future payments, and allow for the postponement or even cancelation of some of these projects, while granting private companies an exit from projects that they are no longer able to finance. This operation would save around half of PPP payments over the next 20 years Finance and Investment Governance Ferreira Reis, Ricardo ctb https://doi.org/10.1787/budget-12-5k47tb293czq Verlag URL des Erstveröffentlichers Volltext |
| spellingShingle | Miranda Sarmento, Joaquim Buy back PPPs An arbitrage opportunity Finance and Investment Governance |
| title | Buy back PPPs An arbitrage opportunity |
| title_auth | Buy back PPPs An arbitrage opportunity |
| title_exact_search | Buy back PPPs An arbitrage opportunity |
| title_full | Buy back PPPs An arbitrage opportunity Joaquim Miranda Sarmento and Ricardo Ferreira Reis |
| title_fullStr | Buy back PPPs An arbitrage opportunity Joaquim Miranda Sarmento and Ricardo Ferreira Reis |
| title_full_unstemmed | Buy back PPPs An arbitrage opportunity Joaquim Miranda Sarmento and Ricardo Ferreira Reis |
| title_short | Buy back PPPs |
| title_sort | buy back ppps an arbitrage opportunity |
| title_sub | An arbitrage opportunity |
| topic | Finance and Investment Governance |
| topic_facet | Finance and Investment Governance |
| url | https://doi.org/10.1787/budget-12-5k47tb293czq |
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