ubs research on bbp, page-29

Hi Plough,
CAPEX isn't an expense, therefore amortisation isn't relevant. Expenditures relating to fixed asset formation are capitalised then depreciated.

Typically project finance for utility assets incorporate CAPEX allowances in the calculation of interest coverage ratios, relevant for covenants. OR, they will include an allowance for D&A. Either way capital replenishment is always included in ICR calculations.

melua,
Just answer me this. Where is the value in the current environment of buying assets at book that have a return on invested capital of around 4-5% with very little scope to increase margins given regulations? Remember the cost of capital for a BBB credit would be at least 12% at the moment. Numbers don't add up, no buyer will pay anywhere near book for BBP's assets in aggregate.