Capital Markets: The Rise of Non-Bank Infrastructure Project Finance

In recent years we’ve all seen significant changes to the financing of large-scale infrastructure projects around the globe. The traditional route of long-term bank debt is still available in some markets. But with stiffer banking regulation, it is questionable whether it can keep up should the project pipeline significantly expand. In many regions, institutional project debt may fill this need.

We believe that capital markets involvement in financing infrastructure projects outside of North America has now reached a tipping point and will steadily increase. Already in 2013 there have been landmark transactions in Brazil, Spain, Holland, the UK and France. But markets around the world have varying degrees of receptivity to institutional debt and different norms. There remains a great deal of confusion among both governments and project sponsors about how best to access the capital markets for infrastructure projects.

This paper seeks to provide some clarity to the project bond concept.