4/30/2023 0 Comments Arranger finance![]() Local institutional bond investors, while happy to take on performance risk, generally are not prepared to take on any form of construction risk. Before the financial crisis, capital markets were seen to be less stable than debt markets, which have now changed given the reduction in global liquidity. The use of project bonds as a funding mechanism may be unattractive to investors with a lower appetite for risk which is inherently higher in the construction industry. Project bonds offer an opportunity for institutional investors to participate in infrastructure projects through listed, tradable securities that can offer superior risk-adjusted returns.Ĭhallenges of using project bonds as a source of funding In addition, Sovereign Wealth Funds are beginning to invest directly into infrastructure projects, so this may also provide an additional source of funding for capital projects into the future. ![]() The use of bonds allows project developers to tap into R3 trillion worth of assets under management by South African institutional investors. Government and the banks alone cannot fund South Africa’s R3,4 trillion infrastructure program. By accessing the institutional bond market, companies are potentially able to reduce the project funding cost. These higher costs will be passed through to the project developers translating to diminished project IRR’s (internal rates of return). Traditionally, deals have been financed through banks, however the implementation of Basel III regulations requires stricter monitoring and disclosures, ultimately leading to higher costs and higher capital requirements. Project bonds open up an alternative debt funding avenue to source financing for infrastructure related projects. However, the global financial crisis has resulted in stricter regulations on banks and their lending requirements which mean that infrastructure projects can no longer be funded by traditional debt alone and other more innovative ways of funding need to be considered and implemented. Our position in France supports our leading position in EMEA: we were ranked 2 nd Best Arranger of Western European Loans.Recent surveys suggest that infrastructure is beginning to be viewed as an asset class of its own and the allocation to this investment class is expected to increase significantly. Stéphane Lavoix, Head of EMEA Loan Origination “This award highlights Crédit Agricole CIB’s leading position and expertise in the arrangement and bookrunning of syndicated loans for French corporates and FIs: number 1 in the Bookrunner league table over the last 3 years.” This position was recognised by our peers in the market – syndication teams of all the banks active in the EMEA loan market – who voted for Crédit Agricole CIB as the Best Arranger of French Loans at the GlobalCapital Loan Awards 2019. our in-depth knowledge of the market and our distribution capabilities that allow us to offer structures, pricing and syndication strategies tailored to our clients financing needs.the expertise of our teams involved in the origination and the execution of the syndications (structuring, arrangement and bookrunning). ![]() ![]()
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