As traditional bank lenders cut back on providing long-term project debt – or exit the business line altogether – greenfield project developers know that they are going to need new sources of long-term capital from institutional investors such as pension funds and insurance companies. But these institutional investors remain wary of the risks of construction delays, cost overruns and long-term project underperformance, and are going to need credit enhancement features in order to bring them in on bond deals.
Structures currently being worked on include the Project Bond Initiative from the European Investment Bank (EIB), a subordinated bond fund from Hadrian's Wall Capital, and the Pebble structure being promoted by ING.