EIB Italian project bond tests new law

Author: Lizzie Meager | Published: 18 Apr 2016
The Passante di Mestre toll road 
surrounds Venice

The first straight project bond to be completed under Italy’s designated new law for the instrument has successfully closed. The deal, a refinancing of a major toll road surrounding Venice, is indicative of the private sector taking bigger roles on European infrastructure-based projects, as banks worldwide are squeezed by Basel III rules.

The €830 million ($933.9 million) proceeds will be used to refinance the construction of the Passante di Mestre toll road. The transaction marks the first time both a project bond, and the European Investment Bank’s (EIB) credit enhancement tool, have been used to fund a project subject to demand-based risk – because it’s a toll road, people don’t have to use it.

“This is a significant departure for the EIB, as it’s a different risk profile to what they’ve accepted on previous PBCE [project bond...