Infrastructure Finance

The Road Ahead

Publication Date	September 2007
Publisher	PFI Market Intelligence
Product Type	Report
Pages	NA
ISBN Number	not applicable
Product Code	PFI00002

Buy this product or for assistance call +44 20 7060 7474

PDF £1,034.00$1720 | €1157

PRINT £795.00$1322 | €890

FAX Order above formats by FAX

Summary

A PFI Market Intelligence Report

Infrastructure finance is undergoing an unprecedented boom with the sector's stable cash flows attracting the interest of a whole range of structured financiers - both on the debt and equity side.

The interest is not limited to the financiers. As the global economy more becomes more dependent on the transport of goods and people, many countries around the world are finding their transport networks are not fit for purpose.

To meet the need for comprehensive information on this vitals strategic sector, Project Finance International has published Infrastructure Finance - The road ahead. This management report reviews past deals activity, details all the potential new deals and discusses at length the current trends and issues in the infrastructure transport finance sector.

Containing information on all the deals transacted since 2000 in the roads, ports, airports and rail infrastructure sectors, this report offers the most comprehensive data set yet produced for the sector. League tables for each country and sector track which countries and financiers have been most active, with some surprising results. Looking into the future, all known potential deals are then detailed - more than 200 worth a staggering US$400bn in total.

The analytical report part of the report begins with a series of articles from leading experts on issues of global interest in the sector. Three regional chapters follow dealing with the key issues, plus up to date information, on the Americas, Asia Pacific and Europe Middle East & Africa. Ten original case studies providing examples of the financing challenges in the regions are integrated throughout these chapters.

The debate over how to fund the urgent required investment in the US toll road sector, Texas in particular is covered in a lot of detail. But while this issue grabs many headlines, many other countries are grappling with the same issue sand turning to structured finance to provide the answers.

The report makes essential reading for those involved in this key economic activity.

Content

Executive Summary
- By Rod Morrison, Editor, Project Finance International
Section 01 - Data Global Transport Projects
- Airports Finance
- Australia, Belgium, Chile, Costa Rica, Cyprus, Denmark, Ecuador, Hong Kong, India, Italy, Japan, Mexico, Netherlands Antilles, Peru
- Poland, Turkey, Uk
- Airport Finance Sector Totals
- Port Finance
- Australia, Belgium, Brazil, Chile, Djibouti, Dominican Republic, Finland, Hong Kong, India, Italy, Mozambique, Oman, Panama, Poland, Russia, Singapore, South Korea, Spain, Sri Lanka, Taiwan, Turkey, Uk, Usa
- Port Finance Sector Totals
- Rail Finance
- Australia, France, Israel, Italy
- Netherlands, Spain, South Africa, South Korea, Sweden, Taiwan, Uk, Usa
- Rail Finance Sector Totals
- Road Bonds
- Australia, Austria, Canada, Chile, Croatia, Dominican Republic, France, Hungary, Ireland, Malaysia, Mexico, Peru, Portugal, South Korea, Uk, Usa
- Road Bond Finance Sector Totals
- Road Loans
- Andorra, Australia, Argentina, Brazil, Canada, Chile, Croatia, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Ireland, Italy, Jamaica, Japan, Mexico, Netherlands, Norway, Philippines, Poland, Portugal, South Africa, South Korea, Spain, Uk, Usa
- Road Loans Sector Totals
- Bank Totals Global
Section 02 - Global Themes
Chapter 01 - Toll Road Alternative Funding Structures
- By Monica Merli, Vice President Senior Credit Officer, Moodys, London
- Introduction
- Key Credit Metrics
- Example Of Conventional Debt Structure
- Example Of Index-Linked Debt Structure
- Example Of Accreting Swap Debt Structure
- Assessment Of Financing Structures
- Moodys Analytical Approach
Chapter 02 - A Bankers View Of Current State Of Road Financing
- By Paul Leatherdale, Managing Director And Member Of The Executive Committee,
- Depfa Bank Plc, Dublin
- International Developments
- Greenfield Development Versus Brownfield Acquisition
- De-Risking Techniques
- Construction Risk Support
- Insurance
- Mitigating Traffic Risk
- Future Developments
Chapter 03 - Long-Term Traffic Growth The Past And The Future
- By Charles Russell, Technical Director, Steer Davies Gleave, London
- Introduction
- Toll Road Project Development
- Traffic Growth Risk
- Demand For Brownfield Sites
- Analysis Of Traffic Growth
- Growth Drivers
- De-Coupling Economic From Traffic Growth
- Long-Term Forecasts For Brownfield Facilities
Chapter 04 - Payment For Roads Availability And Shadow Tolls
- By Bruce Johnson And Richard Threlfall, Kpmg
- To Toll Or Not To Toll
- Shadow Tolls
- Traffic Volume Risk Transfer
- Lane Availability
- Pure Availability
- Congestion Management
- Recent Developments
- Conclusion
Chapter 05 - Light Rail The Issues
- By Robert Lewin, Project And Infrastructure Finance, Capital Markets, Investec
- Some Unique Characteristics
- Multiple Interfaces
- Multi-Discipline Consortia
- Systems Integration/Completion Risk
- Patronage And Revenue Risk
- Some Solutions
- Mitigating The Interfaces
- Separation Of Activities
- Completion/Integration Risk
- Revenue Risk Sharing
- Conclusions
Chapter 06 - Ports Investors Find A New Berth
- By Sreekumar Chatra, Assistant Director, And Richard Abadie, Lead Partner, Global Ppp And Infrastructure Finance, Pricewaterhouse-Coopers Llp, London
- Introduction
- Drivers Of New Capacity Addition
- Where Is New Capacity Being Added?
- Drivers Of M&A
- Recent Trends In Financing
- Future Financing Trends
- Conclusion
Chapter 07 - Regional Airports Runways Paved With Gold
- By Richard Tollis, Partner, Infrastructure Advisory, Ernst & Young
- Introduction
- The Attraction Of Airport Investment
- Value Drivers
- The Benefits For Regional Airports
- It Is Not Only Financial Investors That Stand To Benefit
- Price Drivers For Regional Airports
- Asset Fundamentals
- Efficient Infrastructure Finance
- Sector Prospects
Chapter 08 - Accretion Technique Starts To Mature
- By Rod Morrison, Editor, Project Finance International
- Accretion Swap Structure
- Early Accretion Swap Deals
- Chicago Skyway
- Inexus
- Indiana Toll Road
- Birmingham Northern Relief Road
- Chicago Car Parks
- Recent Deals And The Future
Section 03 - The Americas
Chapter 09 - Us Road Projects
- By Alison Healey, Project Finance International
- State By State Breakdown
Chapter 10 - Hot Lanes As Private Toll Concessions
- By Robert W. Poole, Jr, Director Of Transportation Studies At The Reason Foundation,
- Los Angeles
- Introduction
- Why Hot Is Starting To Replace Hov
- Two Different Models Of Hot Lanes
- Revenue Objectives
- Comparing Performance Of Hot Lane Models
- A Synthesis Approach
- Managed Lane Performance Comparison
- Private Sector Interest In Hot Lanes
- Conclusion
Chapter 11 - The Public Versus Private Toll Road Choice In The Us
- By Dennis J Enright, Principal, Nw Financial Group, Llc, Jersey City
- Introduction
- Defining The Problem
- Funding Options
- Choice Metrics
- Role Of The Cost Of Capital And Leverage
- Choosing The Best Policy
- Conclusion
Chapter 12 - Us Highway Infrastructure A Diamond In The Rough
- By Cherian George, Managing Director, Fitch Ratings
- Introduction
- The Needed Policy Debate
- Funding Issues
- public Versus Private Or public And Private
- Operating Efficiency
- A Quantitative View
- Operating Efficiency A Qualitative View
- Ratemaking Flexibility
- A Way Forward
Chapter 13 - Pabs And Tifia Financing Tools For Surface Transportation Projects
- By Charles S. Henck, Partner, Ballard Spahr Andrews And Ingersoll, Llp, Washington Dc
- Introduction
- Tax Exempt Financing Private Activity Bonds
- Restrictions On The Use Of Pabs
- Exempt Facility Bonds
- Project Eligibility
- Important Restrictions
- Economic Considerations
- Structuring Flexibility
- Pab Volume Cap Applications
- Tifia The Patient Lender
- Features Of Tifia Credit Assistance
- Flexible Repayment Structure
- Selection Process
- Tifiapab Relationship
Chapter 14 - Legal Structures For Ppps In The Us
- By Karen J. Hedlund, Partner, And William B. Fisher, Senior Attorney, Nossaman, Guthner, Knox & Elliott, Llp, Arlington
- Varying Approaches To Ppps
- Legislative Requirements
- States With The Most Active Ppp Programmes
- Florida, Georgia, Oregon, Texas, Virginia,
- New And Pending Legislation
- Alaska, Arizona, California, Colorado, Mississippi, Nevada, North Carolina, New Jersey, New York, Pennsylvania, Tennessee, Utah, Washington
- Federal Restrictions On Ppp Procurements
Chapter 15 - Mexican Toll Roads Back To The Future
- By Allan T. Marks, Partner, Milbank, Tweed, Hadley & Mccloy, Llp, Los Angeles
- Overview
- Background
- The Competition Mexico In The Context Of Canada And The Us
- Investment Prospects In Canada
- Investment Prospects In The Us
- Recent Mexican Market Developments
- Concession Models
- Recent Transactions
- Increasing The Role Of The Private Sector
- Government Of Mexico Current Goals
- State Governments Current Goals
- Future Prospects
- Conclusion Politics Matter
Chapter 16 - Consolidation And Uncertainty Chile And Brazil
- By Alan Gersten, Latin America Reporter, Project Finance International
- Chile
- Planned Projects
- The Role Of Ppps
- The Chilean Model
- Brazil
- Investment Incentives
- Planned Projects
- Challenges To Concessions
Chapter 17 - Case Study: Bridge Is As Good As Gold
- By Massimo Polveraccio, Vice-President, Bilfinger Berger Bot, And Shariq Alvi, Director, Pricewaterhousecoopers
- The Project
- The Tender Process
- Financing Structure
- Monoline Guarantees
- Swaps
- Ppps Fostering Innovation In The Canadian Market
Section 04 - Asia Pacific
Chapter 18 - Driving The Roads
- By Minerva Lau, Asia Editor, Project Finance International
- Introduction
- Indonesia
- Road Projects
- Mrt Proposal
- Monorail Project
- Rail Link
- Ppp Pipeline
- The Philippines
- Road Projects
- Railway Loop
- Priority Rail Projects
- Financing Options
- Pakistan
- Rail Ppps
- Malaysia
- Bullet Train
- Road And Bridge Projects
Chapter 19 - Financing Road Projects In India
- By Cherian Thomas, Senior Director Advisory Services, Infrastructure Development Finance Company Limited, India
- Background
- Enabling Policy, Regulatory And Institutional Frameworks
- Financing The Nhdp
- Enabling Private Investment
- Ppps In State Highways
- Managing Traffic Risks
- Future Outlook
- Returns For Equity Investors
- Idfc And Road Projects
- Case Study: Development Of The First Set Of Annuity Payment-Based Projects
- Idfcs Role
- Broad Framework
- Selection Of Concessionaire
- Private Sector Financial Model
- Public Sector Financial Model
- Bidding Experience
- What Was Achieved?
- Key Lessons
- Case Study: Financing Of An Annuity Payment-Based Project
- Risk Analysis And Mitigation
- Refinancing
- Key Lessons
- Case Study: Financing Of A Direct Toll-Based Project
- Background
- Bid Details
- Implementation Arrangements
- Financing Arrangements
- Security Package
- The Views Expressed In This Chapter Are The Authors Own Views And Do Not Necessarily Represent The Views Of Idfc Limited.
Chapter 20 - Case Study: L&T Vadodara The Bharuch National Highway Project
- By Arun Sharma, Assistant Vice President, Project Advisory & Structured Finance, Sbi Capital Markets, Delhi
- Introduction
- Project Background
- Project Financing
- Issues Of Concern
- Deal Structure
- The Outcome
Chapter 21 - Australian Transport Bubble, Bubble, Tolls And Trouble
- By John Arbouw, Australian Correspondent, Project Finance International
- Introduction
- Sydney Cross City Tunnel
- Project Funding
- Post-Completion Problems
- Project Reorganisation
- Adelaide To Darwin Railway
- Project Economics
- Project Funding
- Project Development
- The Sydney And Brisbane Airport Rail Links
- Sydney Airport Rail Link
- Brisbane Airport Rail Link
- Conclusion
Chapter 22 - Transport Finance In South Korea
- By Seil Kong And Jongman Park, Project Finance Department, Investment Banking Division, Korea Development Bank, Seoul
- Introduction
- Roads
- Railroads
- Ports
- Conclusion
- Case Study: Busan Goeje Fixed Link
- Financial Restructuring
- Investors
- Lenders
Chapter 23 - Case Study: Mumbai Modernisers Reach Milestone
- By Ashish K Singh, Assistant Vice-President, And Bhavna Chugh, Manager, Uti Bank
- Introduction
- Project Sponsors
- Project Details
- Debt Funding
- Deal Profile
- Conclusion
Chapter 24 - Case Study: Uijeongbu Links The Banks In Korea
- By Nicolas Vix, Head, And James Lok, Vice-President, Project And Structured Finance Asia, Calyon
- Project Background
- Concession Agreement
- Engineering, Procurement And Construction
- Operation And Maintenance (O&M)
- Financing Structure
- Conclusion
Chapter 25 - Case Study: Brisbane Bypass
- By Shane Logan, Director, Project Finance, National Australia Bank
- The Project Need
- Project Description
- Key Risks
- Capital Structure
- Equity
- Debt Structure
- More To Come
Chapter 26 - Case Study: Rolling Stock Australias Leading Ppp
- By John Arbouw, Australia Correspondent, Project Finance International
- Reliance Rail The Winning Consortium
- Background
- Project Structure
- Unique Payment Mechanism
- Managing Multiple Stakeholders
- Technical And Procurement Intricacy
- Scale And Contractual Complexity
- Financing Structure
- Bond Market Sell-Down And Deal Reception
- Setting New Benchmarks
- Section 05 - Europe, Middle East And Africa
Chapter 27 - Emea Heading In The Right Direction
- By Antony Collins, Senior Reporter Project Finance International
- Introduction
- Uk, France, Italy, Russia, Spain, Western Europe
- Rail
- Light Rail
- Airports
- Ports And Waterways
- Roads
Chapter 28 - Greek Roads Bear Gifts
- By Spyros Venetsianos And Yiannis Saratsis, Efg Telesis Finance Sa
- New Motorway Projects
- State Project Strategy
- Revenue-Sharing Mechanism
- Bidding Strategy
- Contractual Structure
- Financial Structure
- Conclusion
- Pilot Projects
- Potential Tenders
- District Roads
Chapter 29 - German Road Sector Overview And Outlook 2007
- By Dr Christian Kntel, Partner, Lovells, Frankfurt
- Introduction
- A-Model
- Pilot Projects
- F-Model
- Potential Tenders
- District Roads
Chapter 30 - Partnerships Questions For French Transport
- Introduction
- The Persistence Of Recourse To The Concessive System
- Concession Optimisation Of The Transfer Of Risks To The Private Contracting Party
- Partnership Contract Application
- Curbs On The Development Of The Partnership Contract
- Lenders Rights
- Constraints Specific To The Transport Sector
Chapter 31 - Spain Europes Road Capital
- By Carlos Lpez-Quiroga, Julio Lpez-Quiroga And Ana Pocklington, Maritime, Transport And Logistic Department Of Ura Menndez, Madrid
- Introduction
- Recent Projects
- Road Deals
- Nationwide Programme
- Recent Project Funding
- International Model
Chapter 32 - Case Study: Mars Unwraps Landmark Tram Ppp
- By Antony Collins, Project Finance International
- Project Background
- Risk Allocation
- Financing Structure
- Conclusion
Chapter 33 - Case Study: Gautrain The Worlds Second Largest Ppp
- By Bobby Stewart, Partner, Finance, Infrastructure And Transport Groups, Freshfields Bruckhaus Deringer, London
- The Project
- Project Drivers
- Contractual Structure
- Financing Structure
- Security Structure
- Comparison With Other Greenfield Railway Project Structures
- The Future
List Of Tables And Figures
T=Tables F=Figures
- F1.1: Conventional Debt Structure
- F1.2: Index-Linked Debt Structure
- F1.3: Accreting Swap Debt Structure
- F4.1: Road Payment Mechanism Options
- F4.2: Development Of Dbfo Roads
- F4.3: Typical Shadow Toll Mechanism
- F4.4: Typical Availability/Shadow Toll Mechanism
- F4.5: Probability Distribution For Determining real Revenue Risk
- F4.6: Enhancement Payment Structure
- F4.7: Typical Congestion Management Payment Mechanism
- F6.4: Financing Terms In Select Recent Port Acquisitions
- F6.5: Financing Terms In Recent Port Concessions
- F7.1: Airport Ev/Ebitda Multiples, 200107
- F7.2: Annual Uk Domestic And International Air Passengers, 19952020e (M)
- F7.3: Uk Airport Growth In Passenger Numbers, 19962005 (%)
- T10.1: Managed Lane Performance
- T10.2: Current U.S. Hot (Managed) Lanes Projects
- T11.2: Indiana Toll Road Transaction Toll Increases At 4% (Us$)
- T11.3: Cost Of Capital Public Vs. Private Entities (%)
- T11.6: Impact Of A Public Bid Vs Private Bids (Us$,%)
- T11.7: Texas Sh 121 Bid Comparisons (Us$Bn, %)
- F12.1: Bridges O&M Costs Per Transaction, 200005 (Us$)
- F12.2: Roads O&M Costs Per Transaction, 200005 (Us$)
- F12.3: Rate-Making Flexibility, 200305 (%)
- F13.1: Taxable Vs. Tax-Exempt Rates, May 2002may 2007 (%)
- F13.2: Amt Vs. Tax-Exempt Rates, May 2002may 2007 (%)
- T13.1: Tifia Evaluation Criteria (%)
- T14.1: States With Significant Transportation Ppp Authority, 2007
- T17.1: Geb Transaction Highlights
- F17.1: Gcg Organisational And Financing Structure
- F17.2: Gcg Cpi Swap
- T18.1: Indonesian Toll Road Projects (As Of Nov 2006)
- T19.1: Road Network In India (Km, %)
- T19.2: Summary Of The Nhdp (Km, Rs Bn)
- T19.3: Financing Plan For Nhdp, 200616, 201731 (Rs Bn)
- T19.4: Variance In Traffic (%)
- F19.1: Project Set-Up
- F19.2: Projected Cash Flows (For 95% Debt Financing), 200927 (Rs Crore)
- T20.1: Nhdp Phases
- T20.2: Funding Structure (Rs Crore)
- T20.3: Final Debt Structure (Rs Crore)
- F21.1: Mial Transaction Structure
- F21.2: Master Plan Highlights For Csia
- F21.3: Traffic Statistics At Csia
- T22.1: Transport Sector Investment, 19982006 (Won Bn)
- T22.2: Roads Private Investment (Won Bn)
- T22.3: Soc Road At Us$10,000 Per Gdp
- T 22.4: Railroads Private Investment (Won Bn)
- T22.5: Ports Private Investment (Won Bn)
- T22.6: Current Transport Projects
- F22.1: Project Structure Post-Amendment
- T22.7: Financial Structure (Won Bn)
- F22.2: Project Location
- T23.1: Uijeongbu Lrt Loan Tranches
- T26.1: Comparison Between Public Sector And Private Sector Project Delivery
- F26.1: Contractual Overview
- T26.2: Financial Structure (A$)
- T26.3: Bond Overview (A$M)
- F28.1: Mcp Motorway Projects
- T8.1: Project Description (Km, m)
- T28.2: Project Development Structure
- T28.4: Risk Allocation In The Concession Agreement
- T28.5: Grounds For Termination Of The Concession Agreement
- T28.6: Compensation Entitlement
- T29.1: Proposed A-Model Projects (Km)
- F34.1: Gautrain Contractual Structure
- F34.2: Gautrain Financing Structure