Finance leaders predict surge in PPPs and infra debt funds

The use of public-private partnerships and infrastructure debt funds is on the rise, according to global finance leaders surveyed by French asset manager Natixis.

Fifty-four percent of respondents to a survey Natixis conducted in New York City in May said they expect PPP funding will increase by between 10 percent and 15 percent. The same number also said infrastructure debt funds will play a larger role in project finance compared with banks.

Those who are expecting to see more PPPs said municipal debt funds will be a key financing instrument for projects. And with all the talk this year about US President Donald Trump's $1 trillion infrastructure proposal, 15 percent said they are not expecting new legislation to be accommodating towards PPPs.

In addition to the financiers who said infrastructure debt funds will play a larger role in project finance, 38 percent said that role will be larger compared with banks and traditional lenders. Reasons they gave included strong debt fund capital volumes and banks becoming less competitive on longer-dated maturities.

Bhaswar Joy Chatterjee, head of global finance syndicate at Natixis CIB Americas, said he was “optimistic” about the future of infrastructure debt funds in project finance because they are “supportive of a wider range of risks than banks”.

“The conversation around infrastructure is strengthening in light of the current political environment,” said Jonathan Kim, head of global infrastructure and projects at Natixis CIB. “Opportunities for project finance will be unlocked for banks that are active in various sectors and regions in the Americas, such as Natixis.”

The survey also found that most respondents, 38 percent, believe the hottest infrastructure sector over the next 12 months will be the oil and gas sector. Forty-nine percent said Mexico will be the most active Latin American market, with Chile at 31 percent.

Natixis is the asset management arm of French bank Groupe BPCE.