January 1, 2014
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 2012.
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, gove
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