Congratulations to TXF magazine on their latest conference on export, agency and project finance in Asia in Hong Kong on 14 – 15 November.
Andrew moderated the final session on “The bankability question: vital infrastructure financing in ASEAN” with Michael Boardman from renewables developer Sindicatum and the ADB’s Bart Raemaekers.
What is needed to match the enormous amounts of dry powder earmarked for infrastructure in Asia to actual projects? This may be an all too familiar question but this year sees a number of significant developments:
- Proper Project Preparation – this has been missing on many early Belt & Road deals in particular. For example, Sinosure has recently admitted to paying out $1 billion on the $4 billion Addis Ababa – Djibouti railway; neither investor nor investee can continue like this.
- Suitably structured host government support for either the revenue line of projects or for long term offtakers from those projects – a subject which has been long overlooked but is of particular interest to Andrew. The AIIB’s Special Fund joins the IFC, ADB and others in funding advice to host governments on this and other topics;
- Political risk: the ADB and UK Export Finance now offer guarantees in many local currencies;
- Commercial risks evolve at pace: Feed In Tariffs for renewables are needed much less these days even if sub-sectors such as waste to energy remain difficult; how to tackle new technology risks? Sectors such as energy storage bring risk profiles more akin to energy traders than to a comfortable long term PPA. How best to blend transport and real estate risk profiles in transit orientated developments?
All players – host governments, traditional and new sponsors, multilateral and bilateral agencies, offshore and local banks, even the capital markets – are adjusting what they consider to be “bankable” accordingly.
