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EUROPEAN AIRPORTS: Takeout takeoff?
06 June 2012
Sterling bond investors have snapped up UK airport assets. But European operators have a less creditor-friendly regulatory regime, and banks, for all their weakness, predominate. By Thomas Blott.
Airports should be among the best candidates in European infrastructure for bond financings. They are almost always brownfield concessions, often occupy monopoly positions, and usually produce stable revenue streams. Some of the larger airport operators, particularly those in the UK, have been able to access the capital markets in recent years. They have usually closed a combination of bank and bond debt, in part because the large debt requirements of airport acquisitions and expansions have required sponsors to tap as many sources of debt as possible. European regulators review the tariffs that airport operators can charge at regular intervals, making medium-term debt, whether in the bank or bond market, an important part of airports’ funding mix.
This perceived regulatory risk made banks reluctant to lend long- term even before the onset of the global recession, which dampened banks’ enthusiasm for long-dated debt commitments in all sectors. For European airports banks...
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