SINGAPORE, Jan. 8, 2013 (ANTARA/PRNewswire) -- Political and sovereign risks have become a major stumbling block to getting infrastructure financing secured, as nationalisation, expropriation and currency inconvertibility become top concerns for lenders, according to Marsh's latest Asia Directors' Series.
According to the report, infrastructure investment in Asia is stalling as the appetite for project finance from European banks diminishes and political and sovereign risk concerns increase, creating a new landscape for project sponsors to navigate.
The dislocation between infrastructure demand in Asia and funding challenges from commercial banks has created an opportunity for a number of government backed development, export-import and multilateral financial institutions to take a lead financing role rather than simply a loan syndicate participant or guarantor.
"The demand for infrastructure development in Asia is getting greater by the day, as the need for power generation, transportation and other basic functions continues to grow consistent with the region's economic growth," said Jason Wells, Managing Director and Marsh's Specialty Leader for Asia. "As European banks continue to reduce their long-term lending activities, project sponsors have been forced to adapt their engagement approach to access funding from development banks, which have different lending criteria to commercial banks."
"In addition to the shifting lending landscape, infrastructure project sponsors are going to greater lengths to demonstrate they are insured for political risks and sovereign non-payment risks to demonstrate project bankability and get these deals over the line."
To download the report, please click here.
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Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy, and human capital. With over 53,000 employees worldwide and annual revenue exceeding US$11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in talent, health, retirement, and investment consulting; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.
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