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New infrastructure lending initiatives hit and miss
16 December 2009
Which government and multilateral responses to the credit crunch worked best? Which ones worked quickly enough?
And which will remain features of infrastructure finance beyond the recovery? Tom Nelthorpe reports.
The dust has – mostly – settled. Bankers have resumed attending syndication meetings. The backlog of financings that dates back to September 2008, and Lehman Brothers' implosion, has cleared. Bidding has resumed at pre-crisis levels for social infrastructure assets in markets such as the UK and Canada.
This recovery mirrors a more general recovery in corporate debt and equity markets, and like that recovery, is still vulnerable to shocks. The Nakheel debt standstill, and a threatened rash of downgrades to government-related issuers, indicates that banks' assets are far from solid. Debt against assets with exposure to traffic, trade and tourism will take time to recover.
But the recovery in credit markets has taken hold to a sufficient extent that it is possible to assess the responses of governments and multilaterals to the crisis. At the macroeconomic level, governments and central banks' responses to the crisis were broadly similar, and involved funnelling liquidity...
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