Project bonds have been touted as the future of Asian
infrastructure financing. But a lack of appropriate projects
and shallow domestic capital markets have hindered their
Infrastructure spending in the Asia-Pacific is expected to
approach $5.36 trillion annually by 2025, according to a study
by PricewaterhouseCoopers. Governments will be unable to fund
that level of investment, while
regulations like Basel III make it more difficult for banks
to hold long-tenor project loans on their books – even
when backed by export-credit agencies.
Project bonds are thought to be the answer. But while
they’ve been successful in Latin America and
Europe, local market conditions have limited their development
in the Asia Pacific.
Part of that is a lack of acceptable projects in
jurisdictions with developed legal and bankruptcy regimes.
What investors want
Daniel Mallo, managing director and head of energy
project finance and metals...