A review of 2014’s project finance developments

A review of 2014’s project finance developments

What next for the project finance sector? Mark Richards, partner at Berwin Leighton Paisner, says 2014 has been an interesting year but, looking forward, there will be continued senior debt and equity pricing pressure as deal flow will continue to be constrained.

Has 2014 been a good year for project finance?

It has been an interesting year for project finance in 2014. We have seen increasing amounts of commercial bank liquidity in the project finance market and some established institutions that previously left the project finance market making a re-entry into the market. We have also seen an increase in headcount in the institutional insurance/pension fund credit providers with a number hiring to expand their teams. So we’ve seen a lot of competition in the provision of senior debt in the UK and wider developed European markets.

This increased competition and increased supply of capital is to be matched by the number of new greenfield projects entering the market, especially public–private partnerships (PPPs). While there are a number of renewable energy generation project developments coming to market (onshore wind, offshore wind, offshore transmission owners (OFTOs), ground mounted solar generation, biomass/merchant waste projects) there is a lack of PPP deals in the social infrastructure and transportation sectors.

Have you seen any trends emerging in project finance this year?

The main trends are:

  • greater senior debt and infrastructure debt liquidity
  • fewer social infrastructure and transport PPPs
  • greater competition for senior debt terms, impacting in lower pricing and, in some instances, increasing tenors

What have been the main ch

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