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Ambac guarantees two UK hospital PFI deals

Ambac Assurance UK Limited – a leading guarantor of public finance and structured obligations – has provided triple-A credit enhancement to two major UK hospital deals completed as part of the Government’s ongoing Private Finance Initiative (PFI).

The separate hospital schemes were jointly procured by different public sector NHS Trusts under the title of the Northern Batch Hospitals Project. Each is separate to the other. The winning consortium was a joint venture between Balfour Beatty Infrastructure Investments Limited and HSBC Infrastructure Fund Management Limited
(collectively known as Consort Healthcare). Both are highly experienced with projects of this nature.

Consort Healthcare will design, build and finance the new hospital facilities and will provide non-clinical and maintenance services post-construction under two different concession agreements.

There are separate contracts with Salford Royal NHS Foundation Trust and Tameside and Glossop Acute Services NHS Trust, both running for 35 years.

The two bond issues by Consort Healthcare in September 2007 were for £122m (Salford Hospital) and £78m (Tameside Hospital). Both are amortising index-linked bonds.

“These bonds were issued in the UK market in the middle of the credit crunch and still added value to the hospital Trusts and to Consort. These major deals are evidence of Ambac’s continued leadership in providing credit enhancement for PFI projects in the UK,” said Ian Dixon, Managing Director
of Ambac’s European Infrastructure team.

“While funding spreads were wider than previous issues, Ambac was still able to add significant value against
alternative LIBOR funding options.”

Ambac was awarded the mandate for this transaction after winning a post-preferred bidder funding competition, one of the first in the sector.