Silvertown Tunnel UK PPP
Hedging and Capital Markets
Infrastructure | London
SummaryChatham was advising the largest UK PPP infrastructure project in 2019, connecting the London Blackwall Tunnel to the Royal Docks industrial area.
$1.2bn financing raised
14 lender syndicate
BAFO pre- and post
- The project raised a total of GBP 1.2B across five fixed/floating debt tranches from 14 banks and institutional lenders.
- Chatham benchmarked the underlying swap rates for each debt facility both pre- and post best and final offer (BAFO), and supported KPMG and Transport for London (TfL) up to financial close.
- The chosen bidder at BAFO was the Riverlinx consortia (made up of ASI, BAM PPP, PGGM, Cintra & SK Engineering) advised by Macquarie Capital.
- The project experienced several delays to achieve financial close, during a time of heightened volatility driven predominantly by political events.
- At pre-preferred bidder stage, Chatham ensured that both parties’ pricing in their financial models was based on the same underlying data.
- By benchmarking each of the bidder’s risk solutions at the pre-preferred bidder stage, Chatham was able to negotiate competitive pricing for the execution and credit spreads ahead of financial close. Chatham ran this process while bidders were still competing to be mandated for the concession.
- Given Riverlinx’s complex funding structure, which consisted of multiple funders and debt tranches, including banks and institutional investors, Chatham continued to benchmark pricing for the proposed hedging solution throughout the process.
- Chatham agreed an acceptable financial close protocol with Macquarie Capital.
- Benchmarking with both consortia pre-BAFO ensured that TfL and KPMG knew ahead of time how the chosen bidder would price the hedging at financial close.
- Chatham discussed optimal execution windows with TfL and advised on the benefits risks and considerations of entering the market at different times.
- The execution of the project was successful, achieved its objectives and delivered a competitive result for TfL.
- Financial close was smooth with several dry runs held in the run up.
- TfL achieved competitive and fair pricing as a result of Chatham benchmarking rates during and up to financial close.
Contact the author
Please complete the form below to find out more about the topics discussed in this case study.
This material has been created by Chatham Financial Europe, Ltd. and is intended for a non-U.S. audience. Chatham Financial Europe, Ltd. is authorised and regulated by the Financial Conduct Authority of the United Kingdom with reference number 197251.
Our featured insights
Term SOFR – daily SOFR divergence
Term SOFR is an index rate frequently used in floating-rate loans and notes. It is published by the Chicago Mercantile Exchange (CME Group) in tenors of one, three, six, and 12 months and reflects market expectations for spot SOFR (an overnight rate) for that given tenor. This piece examines...
Expert Conversation with Matt Henry and Rob Mangrelli
Matt Henry, Chatham's Managing Partner and CEO, met with Rob Mangrelli, Managing Director of Hedging and Capital Markets, and together, they discussed a range of economic topics.
- Post Date
- Mar 31, 2023
Expert conversation with Matt Henry and Jackie Bowie
Matt Henry, Chatham's Managing Partner and CEO, sat down with Jackie Bowie, Managing Partner and Head of Europe. In this interview, Jackie discusses macro and micro economic issues and trends that the U.K. and Europe could be facing going into 2023 and 2024.
- Real Estate
- Post Date
- Feb 7, 2023
Chatham Financial announces CEO transition effective January 2022
Matt Henry named the next Chatham CEO
Refinancing Canadian renewables projects post PPAs
Chatham's Hugh Sutcliffe highlights the pitfalls and advantages that financial sponsors face when considering a refinancing of their renewable energy assets.
Refinancing risks and the potential effect on IRR
Read a recent case study for one of our infrastructure clients, looking to hedge their interest rate exposure via a 35-year interest rate swap.
Interest rate hedging for M25 road refinancing
Chatham advised Connect Plus on the refinancing of the M25 motorway, the largest infrastructure refinance in the UK since 2015.