Fitch: U.S. P3 Funding Activity Likely to Rise

U.S. states are likely to pursue public-private partnerships (P3) more frequently in the coming year, Fitch Ratings says. Last week, Kentucky and Ohio submitted a financing plan for the Brent Spence Bridge Project to the Federal Highway Administration that includes a P3 model. This will be Kentucky's first P3 project, if it is procured. Nevada is also considering a P3 project for the first time with Project Neon. Other states with active P3 programs include Florida, Indiana, Maryland, and Virginia among others.

Kentucky and Ohio's proposal calls for construction on the Brent Spence Bridge project to begin in 2016 and be completed in 2020. The $2.5 billion project would use a design-build-finance-operate-maintain model with availability payments. Although availability payments are not always reported by states as debt, Fitch will assess the capacity and willingness of the state to make payments on these types of projects and generally incorporate them in its debt calculations for the state. Kentucky currently has no P3 legislation. The governor generally supports the authorization of P3s in the state and a bill is reportedly in development for debate during the 2014 session that began this week.

The decline in state and federal transportation funding streams, future uncertainty around them, and the need to replace aging infrastructure are among the factors increasingly driving many states to find financing alternatives.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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