COMMENT From Mr Richard G. Little.
Sir, Without even mentioning infrastructure, Michael Milken has quite succinctly summarised the underlying cause of the poor performance of many privately financed deals during the recent financial collapse ("Prosperity rests on human and social capital", October 5); namely, that volatile revenues and high leverage do not mix, and such volatility demands a capital structure that favours equity over debt. This was borne out when many toll road, airport and port projects failed to perform as promised as the recession cut into highway traffic, enplanements and cargo volume. With revenues and liquidity both in retreat, high gearing became a massive liability when projects could not be refinanced, often under any terms.
