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Country reportsMarch 1 2013

The long road to project bonds

It has proven to be a slow and laborious process getting the first credit-enhanced project bonds structured in Europe, but the first deals are finally expected in 2013.
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The long road to project bonds

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.

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