France wants bond funding for new roads

The government is calling on pension funds, insurers, debt funds and other players in the private infrastructure debt market to give it feedback on how bonds could be used to fund new concessions. 

France’s Ministry of Ecology, Sustainable Development and Energy is engineering a change in the way it funds its road concessions away from bank debt and in the direction of bond financing – and is calling on the private sector for input on how to do it. 

“After several years, the bank market is changing and adapting to a new environment. Some of these changes have affected the infrastructure sector through a progressive fall in credit volumes provided by banks to fund projects, accompanied by a worsening of funding conditions, especially for projects exposed to traffic risk,” the Ministry said in a statement. 

With that in mind, the French government is calling on pension funds, insurance companies, debt funds, and other players in the private infrastructure debt space to engage in a dialogue with the authorities and help them understand how best to structure new concessions – particularly in the roads sector – so they can access bond funding. 

The Ministry also wants market participants to tell it what constraints different types of investors face in being able to provide bond financing for future road concessions. It added the government might leverage the European Investment Bank’s project bond initiative – a credit enhancement mechanism, currently in testing – to help improve the risk profile of future bonds in the roads sector. 

Interested parties should respond to the authorities by March 19. To find out more about the consultation process, in French, please click here