I've recently been writing about the difficulties in getting deals done in the cross-border project finance market. The exodus of many key European banks in the space because of a lack of cheap US dollar liquidity has already caused a spike in prices and severe delays in getting deals done. Italians and even the big French banks have been remarkable for their absence.
Bankers are having to think on their feet. Some are advising clients to design projects to tap into export credit agency lines of financing. That could include opting for a product for a specific country, even if it's not the cheapest available, to be eligible for funding. Others are suggesting splitting the deal into pieces where only the absolutely necessary portions get funded now and refinacing via the bond market comes later.
Even with those measures, developers are going to need to tap as many sources and be as creative as they can in the battle for funding. Multilaterals are more involved in the space and make good anchors for such deals. Miniperms, short-term financing that can be taken out in the bond markets, allows local banks to be involved in the mix as they can usually go out to seven- or sometimes 10 years.
The market outlook for this year is murky, grim-sounding bankers say. More expensive and fewer deals with messy combinations of agencies, multilaterals and commercial banks will be the rule. This is a year where everyone is going to be working hard for the money.