Assessment Framework for Financing Public-Private Partnership Infrastructure Projects through Asset-Backed Securitization

Institutional investors are considered reliable sources of financing for infrastructure due to their long-term investment horizon and asset/liability matching requirement. Asset-backed securitization of public-private partnership (PPP) project receivables is considered to be an alternative financing instrument to encourage institutional investment. In order to provide a guideline for practitioners to understand this financing mechanism and make relative decisions, an empirical study is conducted in this paper. Twenty-five critical success factors of public-private partnership asset-backed security (PPPABS) financing were identified through literature review, case studies, and expert interviews. Then, a questionnaire was designed to collect opinions from PPP stakeholders and more importantly the capital markets. Five principal components were derived from principal component analysis. Based on these five dimensions, an assessment framework and index were constructed for PPPABS financing. The paper will be of interest to academics and practitioners who are interested in alternative financing solutions from capital markets to tap institutional investment.