Canadian Public-Private Partnerships should be able to find the sort of very long-term investors they need among insurers and pension funds, Standard & Poor’s Ratings Services says.

“Due to the long-term nature of their concessions (often in excess of 20 years), PPP projects tend to be financed through highly leveraged debt offerings of a similar long-term tenor,” says Standard & Poor’s credit analyst Paul Calder. As a result, demand for long-dated project debt by investors such as life insurance companies and pension funds should be solid (given their need to match long-term liabilities with long-term assets), the ratings agency suggests.

“Also, as familiarity with the PPP project debt market ramps up, it can be expected that a broader investor base in Canada will be attracted to the offerings from this emerging sector,” Calder adds.

S&P says it views construction and long-term lifecycle risks to be among the largest constraints on the rating on a PPP project, where a design-build-finance and operate contract has been awarded by a government to a project consortium.