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Toronto, Ont. – Dexia, a Belgian bank hit by funding worries and exposure to Eurozone loans is involved in underwriting long-term financing for the Windsor/Essex Parkway and three Ontario P3 hospitals. The Belgian and French governments took steps to dismantle and nationalize parts of the bank this weekend.
Dexia’s credit rating was downgraded Friday by Standard & Poor’s to “A-/A-2” because of challenges accessing funding and the need for more collateral.
“Dexia’s downgraded credit rating will mean higher borrowing costs for these projects. The Ontario government must clarify what the fate of Dexia will mean to the Windsor/Essex Parkway project, P3 hospitals and to the provincial treasury,” said Michael Hurley, president of the Ontario Council of Hospital Unions (OCHU/CUPE).
Many of the banks involved in Ontario’s P3 projects are European and “some may fail as the Eurozone’s economic crisis worsens,” said Hurley. “We believe that Ontario will be left to guarantee all financing costs in a scheme where the government committed that all risk would in fact be transferred to the private sector.”
In the United Kingdom the Treasury Select Committee of the House of Commons released a report that found that P3 projects are “an extremely inefficient” way of financing public infrastructure. The committee found the cost of borrowing for a typical P3 project was double the cost of the government financing the project itself.
“The Ontario Liberal government has many P3 projects underway. It’s time to end this method of infrastructure renewal. We can’t afford it and neither can our grandchildren, who will be saddled with these additional costs,” Hurley said.
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For further information:
Michael Hurley, President, OCHU 416-884-0770
Stella Yeadon, CUPE Communications 416-559-9300