The increasing use of private finance to fund capital projects for the provision of public facilities such as roads, hospitals, schools, prisons, courts and police headquarters and the introduction of 'best value' requirements following the Local Government Act 1999, have resulted in the need for a wider range of bonds.
Bonds may be required not only to guarantee the contractual performance of a construction contract, but also to guarantee the performance of facilities management and operational obligations. Funders and providers of capital require adequate security to ensure completion and delivery of the project, upon which the revenue stream required to service the financial obligations of the concession company (or SPV) will normally be dependent. As a result, bond amounts may be more than the customary 10% of contract value.
Contract and operational considerations might mean that bonds are needed over longer periods and that they include speedy recourse and dispute resolution mechanisms.
Zurich has been involved in a large number of transactions for PPP, PFI and best-value arrangements and our experienced team can work speedily and knowledgeably with professionals and funders to produce bespoke bond documentation for each project. Zurich's investment-grade strength can support you in delivering major projects.
If you'd like to know more please contact us.