Refinancing refers to changing or replacing the existing lenders or terms on which debt obligations have been agreed between the Project Company and its lenders. The Project Company will have typically raised debt capital for the project and where it has taken the risk on the debt financing it is generally entitled to rearrange it (though often subject to restrictions). The financial structure of the Project Company is also of interest to the Procuring Authority as it can affect the financial integrity of the Project Company and the project. For example, a refinancing has the potential to raise additional debt which can overleverage the project and/or increase the government’s contingent liabilities.
In addition, a lack of available financing may mean a project becomes unable to continue operations. Financial distress of the Project Company and insolvency are detailed in Chapter 6 (Insolvency). The focus of this section 3.7 is on managing refinancing where there is an available financial market to raise new debt captial.
Refinancing may also be of interest to the Procuring Authority if the PPP contract contains a provision that any financial gains resulting from a refinancing be shared with the Procuring Authority. For example, see the provisions on refinancing found in the 2017 version of the World Bank’s Guidance on PPP Contractual Provisions. 
Approximately 15% of projects in the study had a refinancing of debt which required approval from the Procuring Authority. The figures were dominated by Europe, where three quarters of these refinancings occurred. Almost all refinancings identified during the study took place in the transport sector, however it is difficult to know whether this was a result of characteristics of the particular projects studied or whether it is reflective of the data collection process. The timescale of the data sample size (projects that reached financial close between 2005 and 2015, inclusive) will have an impact on the overall percentage of refinancings as some projects are only in their very early stages.
This section provides a background to Project Company refinancing in Subsection 3.7.1 (Background) and provides guidance on managing refinancing. The key elements to successfully managing refinancing are summarised below and detailed in Subsection 3.6.2 (Guidance).