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Miniperm solutions still falling short
29 July 2010
Some governments are able to prop up long-term infrastructure lending markets with guarantee products, or simply shorten concession lengths. Others will struggle, as a wave of looming mini-perm refinancings demonstrates. Marcus Bensasson reports.
Renewed deal flow in Europe’s PPP sector makes the outlook for new business positive. The sector generally performed well during the credit crunch, but weaknesses in its funding model became painfully apparent. The repercussions of these weaknesses were averted, but have not disappeared.
The danger is that the success that some European governments – most notably the UK and France – have had in alleviating problems with short-term funding is impeding a revival of capital markets activity in the sector. Even before the credit crunch, capital markets never featured very prominently in the European PPP sector, outside the UK. But the number of deals that have closed featuring soft mini-perms since the credit crunch, means that bond activity in the sector will need to pick up rapidly, and soon, if stable and long-term funding solutions for these projects are to be secured.
Before the credit crunch, tenors were...
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