ABSTRACT
Public Private Partnership (PPP) project financing and risk management decisions deserve increasing attention since they have critical implications for the efficient and uninterrupted operation and performance of PPP services for the end-users. This chapter focuses on discussing and explaining municipal bonds and interest rate swaps. This is a useful task since, on the one hand, municipal bonds can provide financing alternatives to fund raising of municipal or regional projects and, on the other hand, financial risks, related in particular to interest rate swings and directly affecting project cost of finance, can be contained and hedged by interest rate swap derivatives. These instruments can contribute to materially improving the risk-return profile of the project under development. The chapter also discusses innovative methods of PPP fund raising and explains the financing advantages of municipal bonds. It deals with the critical issue of financial risk hedging and control in PPPs and explains the interest rate swap derivatives.
