There’s no denying that underinvestment in infrastructure can have deleterious effects upon a country’s trade and economic competitiveness. But, equally, the challenges of financing capital-intensive infrastructure projects from public funds – and without compromising fiscal targets – are only heightening. The question, therefore, is: What tools are available that can ease financing for urgently-required infrastructure projects?
Writing for BRINK NEWS, Trevor D’Olier-Lees and Mar Beltran, both from S&P Global Ratings’ infrastructure ratings practice, bring to light the various means by which projects can raise capital. Traditionally, such projects may have either tapped into the capital markets or employed privatisation models. But, alluding to various worldwide projects including energy infrastructure, water systems and highways, D’Olier-Lees and Beltran highlight some of the emerging financing alternatives: such as “asset recycling”; the use of public-private partnerships (P3); and the “bundling” of assets.
While such methods are increasingly putting capital to work, D’Olier-Lees and Beltran stress that they are not without their challenges. Certainly, these alternatives are not immune to the perennial concerns around costs, technological and counterparty risks, and unfavourable regulatory landscapes.But by identifying, managing and appropriately mitigating these risks, the public and private sector players can create the optimal conditions to enhance infrastructure systems worldwide.
The BRINK NEWS article can be found here.