Project finance markets gets unstuck

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.

About admin

I've been researching and writing on Brazilian financial markets, industry and economy since 2006 for a wide range of specialist media, consultancies and investors. Before that I spent over 10 years in London and New York writing for and editing magazines and journals dedicated to finance, investment and economics in developing markets, mostly for the Euromoney Institutional Investor group and Thomson Financial. Areas of coverage Below are samples of areas that I cover and some of the common themes that I investigate. Capital markets BM&FBovespa markets *capital raising trends: via equities (IPOs and secondary issuance), debt and loans *the asset management industry: legislation and coverage of the key hedge, pension and investment funds * corporate governance: how the regulator is seeking to strengthen best practice and limitations * debt markets: the nascent corporate markets, attempts to boost liquidity and new insturments. * private equity market: why this market has been so successful, who’s involved. *electronic, high frequency trading and alternative trading platforms: what does the future hold? Banking *credit: the growth of consumer and business credit and competition between banks and models *Public versus private: the role and market share of public and private sector banks and the politicization of the industry * internationalization: which Brazilian banks are expanding overseas and where * investment banking: the growth of the domestic market and who’s winning which mandates *regional banks and development banks: what role they play in the industry and how they compete Mining *licensing: the complex process of obtaining environmental, water, land and operating licenses at a state and federal level. * capacity: the feasibility and sustainability of capacity increases * financing: how miners are raising finance in Brazil and abroad *competition: the interplay Vale, MMX and junior miners *logistics: rail, road and port connections Oil and gas: the fund raising issues related to the massive of pre-salt (link) Multilatinas: Who are they and how and where they are expanding Meatpacking: Are debt burdens sustainable, what are the different business models for areas such as branding and distrbution Agriculture: How are farms consolidating, what are environmental risks, how can foreign investors be involved. IT and software: Can Brazil take on India and build a viable long-term IT industry? For more information on clients and work, please see the media and consultancy sections.
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