Global Public-Private Partnerships: Cruising Through the Fog Together in 2024

DBRS Morningstar expects the credit profiles of our rated public-private partnerships (PPPs) to remain generally stable in 2024, despite the current macroeconomic environment, characterized by weak growth prospects, tight labour markets, and moderating inflation.

-- The stable outlook for our availability-based PPPs is supported by the long-term contracts with public sector counterparties whose credit profiles remain solid.
-- All PPPs in our portfolio are essentially insulated from the risks pertaining to the creditworthiness of the construction contractors or the ongoing labour shortage issues of the construction industry.
-- DBRS Morningstar will continue to monitor the transition to electric vehicles (EVs) and while we do not expect the adoption of EVs to have a material impact on our portfolio in near future, such transition could have a gradually increasing influence over the longer term.

“We continue to view the recession risks as elevated; though, strong household balance sheets seem likely to help limit the duration and depth of any downturn,” says Kevin Li, Senior Vice President. “We are also cautiously optimistic that enhanced PPP delivery models could foster stronger partnerships in the long run.”