Asia’s project bonds market has been
slow to take off, as domestic banks continue projects lending.
But another capital markets product may be more successful
While project bonds have been seen as a potential
solution, a myriad of legal and structural concerns have
limited their use.
Many market participants are, however, focussed on
developing capital markets products that can finance
Asia’s infrastructure needs. They are realising it
might be more realistic to turn to the yieldco; an equity
product similar to the real-estate investment trusts (Reits)
and business trusts familiar to institutional and retail
investors in the region.
"More established players who may have assets
outside the US are hoping to mimic the US experience, and are
looking at how they can bundle assets in various Asian
jurisdictions in a yieldco," said Etienne Gelencsér,
partner at Shearman & Sterling in Tokyo.
Yieldcos are typically used in the US to...