Mobilising Capital and Enhancing Project Bankability with Structured Credit Solutions

It is estimated that developing Asia needs to invest $1.7 trillion per year until 2030 to “maintain its growth momentum, eradicate poverty, and respond to climate change”. As governments and the private sector embark on infrastructure spending, some of the major challenges they can expect are the cost overruns, schedule delays or technical problems typical of largescale infrastructure projects.

The project financing framework often used to deliver complex infrastructure projects in emerging markets rest on a core principle of risk allocation. Each type of risk, whether financing, construction or supply risk for example, is allocated to the parties best suited to manage that risk. However, project participants may not always have the risk tolerance or appetite to wholly bear these risks. In such cases, credit and political risk insurance can play an important role in filling the gaps in risk allocation and enhancing the funding viability of projects as a result.

Without suitable risk sharing principles and incentives in place, large scale infrastructure projects may not be able to secure enough funding, adding to the existing infrastructure financing gap faced by many emerging markets in Asia.