Infrastructure finance has changed over the past decade. Traditionally, banks’ balance sheets bore the risks of those long-term loans; now, feeling the squeeze of heavier capital constraints, lenders prefer to keep their project financing at shorter tenors and structure bonds instead. Attracting new sources of funds in the shape of specialists or institutional investors is vital both for banks wanting to remain active in the infrastructure space and for governments needing to get public works off the ground.
This is important for Latin America, where infrastructure needs are pressing and largely unmet. The region’s infrastructure gap would require $180bn a year to fill, according to industry estimates, while government budgets have been drained by the economic troubles of the past two years, from Brazil’s deep recession to Colombia’s slowing growth.