HM Treasury-UK-application note— interest-rate & inflation risks in pfi contracts and hedging-2010

PFI Contracts are intended to pass risk to the private sector if this provides good vfm. In many cases the allocation of risk is straightforward, but there are a number of areas where detailed analysis is necessary. One such area concerns interest-rate and inflation risks. This note looks at i) interest-rate risk and hedging, ii) inflation-related issues, and iii) swap credit premiums.

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