Outlook 2015: A window wide open for refinancings

Healthier banks, growing debt funds and sophisticated institutional investors will provide the liquidity needed to improve terms on a number of deals, argue DIF’s Wim Blaasse and Allard Ruijs.

The year following the Financial Crisis were not devoid of large infrastructure deals – but a number of them were financed at relatively high margins, recalls Wim Blaasse, a managing partner at Dutch-based fund manager DIF.

With the liquidity taps opening decisively over the last six months, he expects 2015 to be a year marked by numerous refinancings. “We see a lot of appetite from banks but also from debt funds and institutional lenders that are keen to refinance some of the more solid projects – on the public-private partnership (PPP) side but also on the renewable energy side. That’s a relatively new thing for us compared to the previous years.”

A majority of such transactions will be motivated by a desire to improve financing terms, notes Allard Ruijs, a partner at DIF. “This year the price of debt has been coming down, there is a lot of liquidity in the market from banks with margins decreasing, and tenors are increasing everywhere again. So now is the time to take benefit of it not only for new deals but also by refinancing operational projects.”

Blaasse points out that some existing assets have also “mini perm” structures – short-term financing for construction projects, usually payable in three to five years – meaning that they need to be refinanced in the near future.

He explains that DIF has now started working on the refinancing of a number of large projects, such as the €1.1 billion A63 in France or the M25 in the UK.

A few other trends highlighted by the pair include the enduring need for geographic diversification, illustrated by the firm’s decision to start operating in Australia, as well as the growing attraction of PPPs across a number of newer markets, such as Germany, Eastern Europe or Turkey.