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The first of five structural failure modes identified in the PPP diagnostic trilogy. Private capital stacks financed through senior debt and subordinated equity transmit market stress — rising rates, credit contractions, sponsor distress — to public service delivery through the PPP structure. Mission continuity is held hostage to capital market conditions.
A hospital concession financed through a sponsor's private equity stack enters distress when interest rates rise. The sponsor's financial stress becomes the hospital's operational stress via the renegotiation mechanism. The CADA structure severs this coupling by placing all capital risk with the deploying foundation.
CADA Section 2 (citing Ghadamian 2025a)