2.6 - How Has the Financial Crisis Reshaped the Market?

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來自 Università Bocconi 的課程

基础设施建设的金融和投资

570 個評分

Università Bocconi

基础设施建设的金融和投资

570 個評分

Learn how debt and equity can be used to finance infrastructure investments and how investors approach infrastructure investments! According to the OECD, the global infrastructure investment requirement by 2030 for transport, electricity generation, transmission & distribution, and water & telecommunications totals to 71 trillion dollars. This figure represents about 3.5% of the annual World GDP from 2007 to 2030. The European Commission estimated, that by 2020, Europe will need between 1.5 - 2 trillion Euros in infrastructure investments. Between 2011 and 2020, about 500 billion Euros will be required for the implementation of the Trans-European Transport Network (TEN-T) program, 400 billion Euros for Energy distribution networks and smart grids, 200 billion Euros on Energy transmission networks and storage, and 500 billion Euros for the upgrade and construction of new power plants. An additional 38 - 58 billion Euros and 181 - 268 billion Euros in capital investment will be needed to achieve the targets set by the European Commission for broadband diffusion. Traditionally investments in infrastructure were financed using public sources. However, severe budget constraints and inefficient management of infrastructure by public entities have led to an increased involvement of private investors in the business. The course focuses on how private investors approach infrastructure projects from the standpoint of equity, debt, and hybrid instruments. The course concentrates on the practical aspects of project finance: the most frequently used financial techniques for infrastructure investments. The repeated use of real life examples and case studies will allow students to link the theoretical background to actual business practices. In the end of the course, students will be capable of analyzing a complex transaction, identifying the key elements of a deal, and suggesting proper solutions for deal structuring from a financial advisor's perspective. Course Format The course will consist of lecture videos, readings, and talks given by guest speakers. Although we do hope you will attend the entire course, it is possible to just focus on single topics. Suggested Readings The course is designed to be self-contained, there are no obligatory readings that must be acquired outside of the course. For students interested in additional study material, you may refer to: • Gatti Stefano, "Project Finance in theory and practice", Academic Press, 2nd edition, 2012.

從本節課中

Syndicate

Module 2 analyzes the relationship between the SPV and its lenders. We will start from the introduction of what a syndicate is looking at the different roles performed by banks in a syndicate and the options available to organize such a syndicate. We will also look at the cost paid by the SPV for the organization of the financing and reflect on how the recent financial crisis has reshaped the syndicated loans market.

2.1 - Syndicate Introduction2:38

2.2 - What Is a Syndicate?10:21

2.3 - What Roles Do Banks Perform?7:19

2.4 - Which Syndication Strategy Can Be Used?10:27

2.5 - How Much Does the Customer Pay?15:05

2.6 - How Has the Financial Crisis Reshaped the Market?7:20

2.7 - Takeaways2:29

與講師見面

Stefano Gatti
Director
Full Time MBA, SDA Bocconi School of Management

>> Many things have changed recently in the syndication market.

We're living periods of crisis, high degree of volatility.

And so, what we see as a normal syndication strategy nowadays, if we can

define strategy as normal, is completely different from what happened in the past.

The crisis has really reshaped the market for syndication.

>> Yeah, yeah, well, indeed.

What are the forces behind it?

>> well, good point.

There have been many things that have been

as a driving force for this kind of change.

I believe that probably one of the

most important has been the financial crisis effect on banks.

If you look at the past most of

the funding flowing to infrastructure came from banks.

And so, banks were really the most important actors in this market.

After the turmoil of 2008, after the demise of Lehman authorities and

regulators understood that probably they had

to intensify the regulatory approach towards banks.

And a series of new regulations have been enacted after Lehman

in order to require banks to strengthen their own position and to show

themselves as more robust vis-a-vis the investor community.

All the bulk of regulation going under the name

Basel III has really required banks to be more capitalized.

But you can appreciate that if you have to give more capital to banks, banks

don't have this capital for free and so they have to optimize the lending policy.

And Basel III has also introduced

a couple of additional constraints to banks.

One of them is particularly important for project and infrastructure finance.

And this constraint is called net stable funding ratio.

A net stable funding ratio is telling you more or less a story of this kind.

If you're a bank and you're lending long

term, which is the typical case of project finance.

Project lasts for 20, 25 years, and on average the traditional

tenure of bank loans for project finance was running between 12 - 15 years.

If you want to lend for such a long term, you must fund yourself at the same maturity.

Basel is not saying that if you are lending with a maturity of

15 years you have exactly to match with the funding of 15 years.

But, in any case, Basel is telling you that you don't have to mismatch

too much the average duration of the

assets with the average duration of liabilities.

And you can understand when the market gets into a crisis period,

funding a bank on such loan maturity is not exactly an easy task.

So, if you don't have the possibility to collect such a big

amount of money long term, you are constrained on the lending side.

So, from my point of view, what has

been really the driving force of the reshaping of

the syndication loan market, is that unfortunately

for them, banks could also be eager to lend.

But unfortunately, the regulator hampers a little bit this possibility.

>> When other banks refrain from lending, what

other alternative sources of financing can there be?

>> well, it is exactly a good point

because, on one side banks are refraining from lending.

If you look at the market data after Lehman demise.

You see that the amount lend by banks using traditional syndicated

loans, the project finance is not at the same level of pre-crisis period.

There has been a rebound, but the rebound has still to come.

So, the problem remains if banks do not lend.

It is obviously important to find backup sources of financing.

Luckily enough for us what we're are experiencing now, is a period that is

characterized by a very low level of yields for most traditional asset classes.

Stocks are overvalued.

Bonds are yielding very low level of yield, and so, at

the end of the day now, investors are looking for yield.

And infrastructure can be an alternative asset class that is becoming more and

more interesting for investors that traditionally

were investing in more traditional asset classes.

You name them, life insurance, pension funds, foundations.

All these kinds of long-term investors are

looking with greater and increased interest to infrastructure.

Banks have understood this.

And what they have tried to do is to reshape slightly

the way the syndication process was carried out in the past.

We have seen that typically a syndication process is a

process where one bank shares the commitment to lend with other banks.

process where one bank shares the commitment to lend with other banks.

The trend now is that banks, mandated lead arrangers, are organizing syndicates

where there is a mixed combination of banks and institutional investors.

So, the syndicate is becoming a new way to attract investors

that are not familiar with this kind of asset class, using the syndication

structure where banks typically take care of the due diligence process, the

analysis of the deal, the risk analysis and the pricing of the deal.

While institutional investors are simply invited as providers of money.

So, under the umbrella of the due diligence provided by the MLA and the

other banks of the syndicate, they can have access to this interesting asset

class, providing money that banks now are no longer able to lend.

There are many different models that we can use in order to attract investors.

But I would say, at this stage, that the general mood is that we

have radically moved from bank to bank

syndication, to bank to institutional investors syndication.

And I'm sure this will be the leading trend in

the future in order to attract more capital to infrastructure.

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