After several years of aggressive growth, banks are slashing
project finance lending in Latin America. In the year to late
November 2013, banks had lent 43% fewer project finance
funds-89 loans for $16.9 billion-equivalent -than in all of
Infrastructure Report: Financing innovation: The way back
Bond investors are showing a renewed interest in financing Latin America’s infrastructure. But bank lending still offers advantages that the markets cannot. By Joti Mangat
Meanwhile, project sponsors are increasingly using the bond
markets favoring, in particular, sales of local currency debt
to domestic investors. Latin American firms issued 15 project
bonds worth $5.4 billion-equivalent in the first 11 months of
2013, up from $4.2 billion-equivalent in the previous year, and
$2.2 billion-equivalent in 2011.
Energy projects accounted for around half those deals.
Public infrastructure projects - including roads, government
buildings, hospitals, ports, waste, water and sewerage - made
up the other half, Dealogic data shows.
Despite commercial banks' historical role in construction
finance, project lenders, sponsors, investors and rating
agencies all agree that the bond market's share of Latin
American infrastructure financing...
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