Copying and distributing are prohibited without permission of the publisher
Selective liquidity
01 October 2007
Project margins are going up – but is the liquidity crunch spawned by US subprime defaults merely the excuse for, rather than the cause of, a necessary price and risk correction in the project market. And if so, how far will that correction go? By Paul Smith.
Read more:
[project finance]
[lending]
[project debt]
Generalisations are easy in times of panic, but as the dust settles more subtle effects can be observed. The 'credit crunch' has had a selective impact on project finance deals: the effects are not global and have impacted liquidity most substantially in banks either side of the Atlantic. "It's a liquidity issue rather than a credit issue," is a common refrain from project finance bankers. Also 'crunch' seems too strong a word, as many banks are untouched by the turbulence – Japanese, Middle East and German banks (IKB Bank the exception) still enjoy substantial liquidity.
Some project finance deals have also escaped the effects of the 'credit crunch' altogether, whether by geography, such as the South American and Asian markets (the Mexican toll road deals are a good example of large syndicated deals), by sector or by size.
"The liquidity squeeze has not had much effect on the medium-lower ticket end,"...
Take a free website trial to read this article. It’s easy to get a trial – just follow this link or email info@projectfinancemagazine.com.
Or, if you’re a subscriber or have an active trial, simply log in below to read the article.
Subscribe
Subscribers have unlimited access to all current and archive content. Start your
subscription today - click on the button below.
Subscribe
Free trial
Taking a free trial will give you access to the latest news and analysis, as
well as the online deals database, BenchBase. Start your free trial today.
Free Trial