Capital markets in PPP financing

It provides background information on the role of capital markets in PPP financing, and their principal advantages and disadvantages compared to traditional bank financing. It then reviews the dominant delivery model for PPP bonds, the so-called " monoline model " , and the impact of the downgrading of the monolines' rating following the credit crisis. The paper further analyses the reasons why capital markets have withdrawn from PPP financing, and explores potential constraints and solutions to revive and expand the role of capital markets. Although there are active capital markets for PPPs outside Europe, notably in the USA, Canada, and Australia, this paper covers only the European market, focusing on its two principal components, the UK market (Sterling zone) and continental Europe (Euro zone). EPEC is a collaboration between the EIB, European Union Member and Candidate States and the European Commission which is designed to strengthen the organisational capacity of the public sector to engage in Public Private Partnership (PPP) transactions.