Sale of £327m loan used as part of Queen Alexandra Hospital in Portsmouth redevelopment
A LOAN of more than £300m used to finance a 16-year-old redevelopment at Queen Alexandra Hospital in Portsmouth has been sold.
The Department of Health and Social Care announced it has sold the £327m loan used for the the private finance initiative (PFI) funded expansion of QA, that started in 2005.
As reported by The News, the expansion - that was completed in 2010 - was revealed to cost taxpayers at least £1.7bn as project costs and repayments spiralled.
According to the Portsmouth Hospitals University NHS Trust, which runs QA, the loan sale has been 'under discussion for a number of years' and was delayed due to the liquidation of the former PFI partner, Carillion.
The money will be returned to the public sector as a whole and the trust’s future PFI payments will remain unchanged by this loan sale.
As part of the sale insurance company Assured Guaranty UK Limited has set up guaranteed scheduled principal and interest payments on £327m worth of bonds.
Dominic Nathan, managing director of Assured Guaranty UK said: 'The successful placement of £327m of 100 per cent index-linked wrapped bonds into the public markets attests to the significant demand from investors for long dated, guaranteed index-linked debt.
'The prevailing low interest rate environment created the ideal conditions for the Department of Health and Social Care to realise the benefits arising from the transfer of their loan.
'We believe investors are attracted to the wrapped bonds by the A2 (stable) rating and the associated reduction in capital charges our guarantee brings to long-term financings, along with the efficient asset-liability matching this type of investment can provide.'
The £256m rebuild at QA was funded as part of a 32-year PFI deal struck by the trust and consortium The Hospital Company in December 2005.
An investigation by JPI Media in 2019 revealed costs to repay investment firms rose from £32m in 2009/10 to £54.6m in 2018, and were expected to swell further to £93.9m by 2039/40 - meaning the project would end up costing more than £1.7bn.
The transaction will have no operational impact on the hospital or its services provided, QA said.
It comes as work to build a new 72-bed ward at the site began this year.