New PPPs Flood Market, As Capital Remains Scarce

Competition for private capital is increasing across the infrastructure space. This is because an ever-growing number of countries are turning to the public-private partnership (PPP) model to develop new infrastructure to revive and support economies as well as take the financial burden off the public sector. PPPs, long confined to low risk developed markets, are increasingly gaining traction in emerging markets; however, higher risks are making them harder to promote. Using our Project Finance Ratings and our analysis of projects and financing trends, we highlight that the Asia region stands to be the major winner in the competition for private sector capital, whilst Latin America and Africa will continue to see mixed performances, with regulatory and financing improvements necessary for greater success.

Over the past 12 months, there have been a growing number of public-private partnership (PPP) opportunities coming to market in emerging markets. Some have been in the pipeline for a number of years, and are finally making progress; whilst others are in new countries that are taking their first steps into the PPP market. The end result is that the infrastructure space is flooded with PPP project opportunities in emerging markets.

This however does not mean that PPPs in emerging markets are universally embraced by the private sector. Many sponsors and developers are still calculating the risks associated with these projects, while financiers for high risk emerging market assets are still rare. At a time when project financing is constrained globally, this is creating high competition for capital amongst emerging market projects, with those offering the best returns in the most stable environment most likely to be successful.

On Track For An Average Year
PPPs Reaching Financial Close

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Sector: Infrastructure

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