Irish National Development Finance Agency (NDFA) has announced that the State has achieved savings of €23 million (US$ million) following the refinancing, at lower borrowing rates, of the senior debt on the N17/N18 Gort to Tuam public private partnership (PPP) road project.

This is the first-ever refinancing of an Irish PPP transaction. The refinancing takes advantage of the significant fall in borrowing costs since the original financing package was finalised in 2013 (the PPP contract reached financial close in April 2014).

Senior debt terms were originally secured for the project at a time when pricing for Irish PPPs was high, primarily due to Ireland’s participation in the EU/IMF programme. The downward movement in funding terms for Irish PPPs in more recent years provided a favourable opportunity to generate significant cost savings for the State in respect of this project.

The NDFA, part of the National Treasury Management Agency, provided financial advice to the procuring authority, Transport Infrastructure Ireland (TII), throughout the refinancing negotiations with the sponsors, Direct Route.

As part of the refinancing the European Investment Bank (EIB) is being prepaid with new cheaper commercial debt from a private investor group, including both European and US based insurance / pension funds who will lend to the project under a private placement structure.

Most existing commercial funders are also remaining in the transaction and in the majority of cases are providing additional debt.

The N17/N18 Gort to Tuam PPP Project, a 57 km stretch of motorway standard dual carriageway, forms an important part of the Atlantic road corridor. It is a strategic component of the national primary route network providing high quality north-south linkage in the western region.

NDFA Director, Brian Murphy said: 

“We are very pleased to have helped secure the first Irish PPP refinancing arrangement securing cost savings to the State.

The introduction of new commercial debt in place of the EIB is a further example of the depth and breadth of funding sources now available for well-structured Irish PPP projects at very competitive rates.

This refinancing demonstrates our ongoing commitment to achieving the best value for the money possible for the taxpayer in every aspect of our work.

In the past 18 months the NDFA has been involved in €1.8 billion of projects through our procurement and financial advisory functions and the N17/N18 refinancing follows the successful closing of the Primary Care Centres PPP last week.”