Buoyed by significant needs for new infrastructure and a growing urban population, the US has the potential to become the largest market for P3s in the world, according to Moody’s.
In a report assessing trends for public-private partnerships around the globe, the rating agency found that an increasing number of states are authorising their use for transportation projects, which it says are typically the first type of P3s developed in new markets.
Two main drivers would help make the scheme a popular funding solution in the country: the need to upgrade, replace or build out existing infrastructure assets and the inability of governments to finance these new infrastructure investments entirely on their balance sheets.
Looking across North America, Moody’s hailed Canada as the most mature market, as P3s there have predominantly been availability-payment projects. Mexico, by contrast, was said to primarily rely on demand-risk P3s, where private developers and investors are paid back through the user fees they collect.
The US was seen as standing somewhere in the middle, with a history of demand-risk P3s but a growing number of availability-payment projects.
“Aided by supportive legislation and public-policy initiatives, more P3 availability-payment projects are reaching financial close or are in procurement than ever before,” said John Medina, assistant vice president at Moody’s, in a statement.
Last year, these have included the I-69 in Indiana (for $370 million), the Goethals Bridge P3 for the Port Authority of New York and New Jersey (for $1.5 billion), and the $2.3 billion availability-payment P3 to fund the I-4 in Florida.