17:14 Dec 17, 2018
this "DBF contract" will be financed through sources that would expect to get a higher interest rate than the one that applies to "direct public debt" i.e. when the state borrows money.
The "premium" here is the additional interest rate, how much this financing would cost more in interest compared to the rate at which a State (as a borrower in principle more reliable than any private company) can obtain credit.
For example this "DBF contract" would be maybe financed by a loan at 5% interest, while a public body could borrow at say 3% - the "premium" to pay to go through this "DBF contract" would be 2%. So obviously, to make it worthwhile there must be some savings to be made elsewhere, bigger than this "premium". |