Capital markets financing can bridge the infrastructure gap

By Olga Rosca
@olgarosca

 EBRD welcomes revolutionary new approach to infrastructure project delivery

EBRD President Suma Chakrabarti and other MDB heads at Global Infrastructure Forum 2016

EBRD President calls on IFIs to act as catalysts in capital markets transactions for infrastructure projects

Capital markets financing for infrastructure projects can help bridge the infrastructure gap, President of the European Bank for Reconstruction and Development (EBRD) Sir Suma Chakrabarti told the inaugural Global Infrastructure Forum 2016 in Washington today.

Addressing development partners, Sir Suma said: “Emerging markets and development economies, supported by the multilateral development banks, need to re-double their efforts to create the right conditions for capital market transactions for infrastructure.”

He added: “Acting as catalysts for investment by others, international financial institutions can provide a much needed multiplier effect.”

“In Turkey, for example, the environment has improved to such an extent that the port operator in Mersin could raise fresh capital for expansion needs through a corporate bond issuance.”

The Eurobond launched by Mersin International Port (MIP) in 2013, where the EBRD acted as an “anchor investor”, was Turkey’s first infrastructure bond, attracting a host of local and international investors.

In the Slovak Republic, the R1 motorway, already operated under a long-term concession by the private sector, went to the capital markets for its refinancing needs.  The EBRD’s participation in that transaction catalysed parallel investment.

Taken together, EBRD participation of around €270 million in these two projects leveraged over €1.5 billion in funds from other private sector and institutional investor sources. 

The President also highlighted the importance of adequate capital market laws, enabling legislation, regulatory stability and the sustainability of infrastructure funding from the public sector.

He called on development partners to help countries create the right environment to allow accelerated infrastructure investment on a global scale.

The first Global Infrastructure Forum 2016 held as part of the World Bank/IMF Spring Meetings brought together for the first time the leaders of the multilateral development banks (MDBs) -- African Development Bank, Asian Development Bank, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank Group, Islamic Development Bank, New Development Bank, and the World Bank Group – as well as development partners and representatives of the G20, G24, and G77.

Organised in close partnership with the United Nations, the forum aims to enhance multilateral collaborative mechanisms to improve infrastructure delivery globally.