As politician prepare to stick taxpayers with a massive bill on infrastructure spending, it's import to recognize that there is private-sector cash available for worth projects.
For example, the latest bond offering in Canadian markets showed investors remain willing to finance toll roads.
The owners owner of the highway that allows drivers to bypass Toronto gridlock for a price - 407 ETR International - sold $500-million of debt on Friday. Lead underwriter RBC Dominion Securities upsized the financing from $300-million in the face of strong demand. The toll road bandwagon started by the likes of Wellington Financial is picking up steam.
In simple terms, governments are typically the best source of the capital needed to start a project, such as a highway, hospital or school, when what's known as completion risk is high. Once a project is generating cash, public investors have shown they are more than willing to step up.
The 407 ETR International financing came in two tranches: $300-million of three-year bonds priced to yield 340 basis points over the comparable government of Canada bond, and a second slug of $200-million in five-year bonds sold at a premium of 345 basis points over the comparable government debt.
The 407 ETR is is owned by Spain's Cintra Concesiones de Infraestructuras de Transporte, a unit of Australia's Macquarie Infrastructure Group and SNC-Lavalin.
