Monday, 3 March 2008

How the credit crunch has hit plans for new hospital

The Financial Times reports today that the crisis in the American Bond Insurance market may impact negatively on the private finance initiative project to build the new hospital proposed by the Maidstone & Tunbridge Wells Trust. What this effectively means is that instead of issuing bonds to fund the project - the cheapest funding option available - the consortium in charge of the project will have to rely on bank loans instead. And given the bank markets are having a rather tumultuous time as a result of the credit crunch, the cost of completing the project may increase. Other PFI projects have been halted because of similar problems with bonds - since enough money has been spent already on the new hospital project it would be a shame if it became a terminal victim of a slowing economy.

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