The Rise, the Fall, and ... : The Emerging Recovery of Project Finance in Transport
Recent developments in emerging financial markets have dramatically changed the appetite for (and terms of) transport infrastructure projects. As a result of defaults in Asia and Russia and devaluations in Asia, Brazil, and Russia, political and cu...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2000/07/437092/rise-fall-emerging-recovery-project-finance-transport http://hdl.handle.net/10986/19817 |
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okr-10986-198172021-04-23T14:03:46Z The Rise, the Fall, and ... : The Emerging Recovery of Project Finance in Transport Estache, Antonio Strong, John AFFILIATE AFFILIATED COMPANIES AIRPORTS ASSETS BALANCE SHEET BALANCE SHEETS BANKRUPTCY BOND MARKETS BORROWING BORROWING COSTS CAPITAL EXPENDITURES CAPITAL MARKETS CAPITALIZED INTEREST CASH FLOW CASH FLOWS COLLATERAL COMMERCIAL BANKS COMMERCIAL DEBT CONSTRUCTION CORPORATE FINANCE CREDIT ANALYSIS CREDIT RISK DEBT DEBT FINANCING DEBT INSTRUMENTS DEBT PAYMENTS DEBT RESTRUCTURING DEBT SERVICE DEBT SERVICING ECONOMIC CONDITIONS ECONOMIC GROWTH ECONOMICS EMERGING MARKETS EQUITY INVESTMENT EXCHANGE RATES FINANCIAL CRISES FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL PERFORMANCE FINANCIAL RISK FINANCIAL RISKS FINANCIAL STATEMENTS FINANCIAL STRUCTURE FINANCIAL STRUCTURES FINANCIER FOREIGN EXCHANGE INCOME ELASTICITY INFLATION INFRASTRUCTURE LOANS INSURANCE INTEREST RATES INVESTMENT BANKERS INVESTMENT BANKS LABOR COSTS LAWS LEASING LEGISLATION LEVIES LICENSES MACROECONOMIC CONDITIONS MATURITY NATIONAL GOVERNMENTS OFFERINGS OPERATING COSTS PORTS POTENTIAL EXPOSURE PRIVATE SECTOR PRIVATIZATION PROFITABILITY PROJECT FINANCE PROJECT FINANCING PROVISIONS PUBLIC FUNDS PUBLIC SECTOR PUBLIC SECTOR BORROWING REFINANCING RISK REGIONAL DEVELOPMENT BANKS RETURN ON EQUITY RETURN ON INVESTMENT REVENUE GUARANTEES RISK MANAGEMENT RISK OF LOSS RISK PREMIA RISK PREMIUMS RISK SHARING ROADS SECURITIES SECURITIZATION TAX TECHNICAL ASSISTANCE TRANSACTION COSTS TRANSPARENCY TRANSPORT Recent developments in emerging financial markets have dramatically changed the appetite for (and terms of) transport infrastructure projects. As a result of defaults in Asia and Russia and devaluations in Asia, Brazil, and Russia, political and currency and exchange risk premia have increased dramatically. Given large needs for sovereign debt financing, infrastructure project finance will be seeking guarantees at the same time as governments are issuing primary securities. Large portfolio outflows in emerging market funds mean that the sources of both equity and debt capital that became available in the mid-1990s are drying up for all but the most creditworthy projects. Moreover, real economic effects from financial events have consequences in the transport sector, since transport is a derived demand. Any decline in real economic activity is felt quickly in traffic levels and revenues. Currency devaluations that help spur exports may generate higher volumes for seaports and air cargo activity. These effects vary by sector, especially over the medium to longer term. Declines in real economic activity make matters especially difficult for toll roads, as drivers shift to free alternatives and reduce the number of trips taken. What does all this mean for project finance in transport? Risks have increased. Debt finance costs more. The available tenor of debt instruments has shortened and more equity is required for projects. The sources and availability of equity finance have changed. Project finance efforts have shifted from new projects to the privatization, rehabilitation, and expansion of existing facilities. And a "superclass" of sponsors, bankers, and investors has emerged. Failures and mistakes in project finance deals in the 1990s were sharp and persistent. But much has been learned about sound project economics, conservative financial structures, comprehensive sensitivity analysis, the effects of macroeconomic factors, and the need for proper incentives and sound institutional and regulatory arrangements. 2014-08-28T17:28:10Z 2014-08-28T17:28:10Z 2000-07 http://documents.worldbank.org/curated/en/2000/07/437092/rise-fall-emerging-recovery-project-finance-transport http://hdl.handle.net/10986/19817 English en_US Policy Research Working Paper;No. 2385 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AFFILIATE AFFILIATED COMPANIES AIRPORTS ASSETS BALANCE SHEET BALANCE SHEETS BANKRUPTCY BOND MARKETS BORROWING BORROWING COSTS CAPITAL EXPENDITURES CAPITAL MARKETS CAPITALIZED INTEREST CASH FLOW CASH FLOWS COLLATERAL COMMERCIAL BANKS COMMERCIAL DEBT CONSTRUCTION CORPORATE FINANCE CREDIT ANALYSIS CREDIT RISK DEBT DEBT FINANCING DEBT INSTRUMENTS DEBT PAYMENTS DEBT RESTRUCTURING DEBT SERVICE DEBT SERVICING ECONOMIC CONDITIONS ECONOMIC GROWTH ECONOMICS EMERGING MARKETS EQUITY INVESTMENT EXCHANGE RATES FINANCIAL CRISES FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL PERFORMANCE FINANCIAL RISK FINANCIAL RISKS FINANCIAL STATEMENTS FINANCIAL STRUCTURE FINANCIAL STRUCTURES FINANCIER FOREIGN EXCHANGE INCOME ELASTICITY INFLATION INFRASTRUCTURE LOANS INSURANCE INTEREST RATES INVESTMENT BANKERS INVESTMENT BANKS LABOR COSTS LAWS LEASING LEGISLATION LEVIES LICENSES MACROECONOMIC CONDITIONS MATURITY NATIONAL GOVERNMENTS OFFERINGS OPERATING COSTS PORTS POTENTIAL EXPOSURE PRIVATE SECTOR PRIVATIZATION PROFITABILITY PROJECT FINANCE PROJECT FINANCING PROVISIONS PUBLIC FUNDS PUBLIC SECTOR PUBLIC SECTOR BORROWING REFINANCING RISK REGIONAL DEVELOPMENT BANKS RETURN ON EQUITY RETURN ON INVESTMENT REVENUE GUARANTEES RISK MANAGEMENT RISK OF LOSS RISK PREMIA RISK PREMIUMS RISK SHARING ROADS SECURITIES SECURITIZATION TAX TECHNICAL ASSISTANCE TRANSACTION COSTS TRANSPARENCY TRANSPORT |
| spellingShingle |
AFFILIATE AFFILIATED COMPANIES AIRPORTS ASSETS BALANCE SHEET BALANCE SHEETS BANKRUPTCY BOND MARKETS BORROWING BORROWING COSTS CAPITAL EXPENDITURES CAPITAL MARKETS CAPITALIZED INTEREST CASH FLOW CASH FLOWS COLLATERAL COMMERCIAL BANKS COMMERCIAL DEBT CONSTRUCTION CORPORATE FINANCE CREDIT ANALYSIS CREDIT RISK DEBT DEBT FINANCING DEBT INSTRUMENTS DEBT PAYMENTS DEBT RESTRUCTURING DEBT SERVICE DEBT SERVICING ECONOMIC CONDITIONS ECONOMIC GROWTH ECONOMICS EMERGING MARKETS EQUITY INVESTMENT EXCHANGE RATES FINANCIAL CRISES FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL PERFORMANCE FINANCIAL RISK FINANCIAL RISKS FINANCIAL STATEMENTS FINANCIAL STRUCTURE FINANCIAL STRUCTURES FINANCIER FOREIGN EXCHANGE INCOME ELASTICITY INFLATION INFRASTRUCTURE LOANS INSURANCE INTEREST RATES INVESTMENT BANKERS INVESTMENT BANKS LABOR COSTS LAWS LEASING LEGISLATION LEVIES LICENSES MACROECONOMIC CONDITIONS MATURITY NATIONAL GOVERNMENTS OFFERINGS OPERATING COSTS PORTS POTENTIAL EXPOSURE PRIVATE SECTOR PRIVATIZATION PROFITABILITY PROJECT FINANCE PROJECT FINANCING PROVISIONS PUBLIC FUNDS PUBLIC SECTOR PUBLIC SECTOR BORROWING REFINANCING RISK REGIONAL DEVELOPMENT BANKS RETURN ON EQUITY RETURN ON INVESTMENT REVENUE GUARANTEES RISK MANAGEMENT RISK OF LOSS RISK PREMIA RISK PREMIUMS RISK SHARING ROADS SECURITIES SECURITIZATION TAX TECHNICAL ASSISTANCE TRANSACTION COSTS TRANSPARENCY TRANSPORT Estache, Antonio Strong, John The Rise, the Fall, and ... : The Emerging Recovery of Project Finance in Transport |
| relation |
Policy Research Working Paper;No. 2385 |
| description |
Recent developments in emerging
financial markets have dramatically changed the appetite for
(and terms of) transport infrastructure projects. As a
result of defaults in Asia and Russia and devaluations in
Asia, Brazil, and Russia, political and currency and
exchange risk premia have increased dramatically. Given
large needs for sovereign debt financing, infrastructure
project finance will be seeking guarantees at the same time
as governments are issuing primary securities. Large
portfolio outflows in emerging market funds mean that the
sources of both equity and debt capital that became
available in the mid-1990s are drying up for all but the
most creditworthy projects. Moreover, real economic effects
from financial events have consequences in the transport
sector, since transport is a derived demand. Any decline in
real economic activity is felt quickly in traffic levels and
revenues. Currency devaluations that help spur exports may
generate higher volumes for seaports and air cargo activity.
These effects vary by sector, especially over the medium to
longer term. Declines in real economic activity make matters
especially difficult for toll roads, as drivers shift to
free alternatives and reduce the number of trips taken. What
does all this mean for project finance in transport? Risks
have increased. Debt finance costs more. The available tenor
of debt instruments has shortened and more equity is
required for projects. The sources and availability of
equity finance have changed. Project finance efforts have
shifted from new projects to the privatization,
rehabilitation, and expansion of existing facilities. And a
"superclass" of sponsors, bankers, and investors
has emerged. Failures and mistakes in project finance deals
in the 1990s were sharp and persistent. But much has been
learned about sound project economics, conservative
financial structures, comprehensive sensitivity analysis,
the effects of macroeconomic factors, and the need for
proper incentives and sound institutional and regulatory arrangements. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Estache, Antonio Strong, John |
| author_facet |
Estache, Antonio Strong, John |
| author_sort |
Estache, Antonio |
| title |
The Rise, the Fall, and ... : The Emerging Recovery of Project Finance in Transport |
| title_short |
The Rise, the Fall, and ... : The Emerging Recovery of Project Finance in Transport |
| title_full |
The Rise, the Fall, and ... : The Emerging Recovery of Project Finance in Transport |
| title_fullStr |
The Rise, the Fall, and ... : The Emerging Recovery of Project Finance in Transport |
| title_full_unstemmed |
The Rise, the Fall, and ... : The Emerging Recovery of Project Finance in Transport |
| title_sort |
rise, the fall, and ... : the emerging recovery of project finance in transport |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/07/437092/rise-fall-emerging-recovery-project-finance-transport http://hdl.handle.net/10986/19817 |
| _version_ |
1764441474662924288 |