Transatlantic windfall

Look from one side of the Atlantic to the other from the US to the UK and you’ll be taking in more than 50 percent of the global project finance market in the third quarter of 2012, with the two countries together accounting for around $17.5 billion of the $33.8 billion in total activity during the three months.

The UK was home to three of the top ten deals during the quarter, with the largest of the trio being the $3.8 billion Intercity Express Programme (IEP) involving infrastructure upgrades to allow new trains to operate on the Great Western Mainline. Phase one of the project reached financial close in July.

IEP was not the largest project during the quarter, however – this accolade went to the $5.8 billion Sabine Pass liquefaction project in the US state of Louisiana. This involves the development, construction and operation of a natural gas liquefaction facility.

However, the strong showing in the US and UK obscures what was a subdued third quarter for the project finance market globally. From the US in second place with almost $8 billion of deals, a big gap is evident to France in third place with less than $3 billion and a global share of less than 9 percent. The overall total of $33.8 billion is a marked decline on the $58.3 billion recorded in the second quarter.        

Earlier in 2012, we had noted that the normally dominant position of Spanish bank BBVA in the mandated lead arranger (MLA) table had come under threat from various Japanese banks. In Q3, the bank was indeed usurped – finishing third behind Mitsubishi UFJ Financial Group and Mizuho.

Mitsubishi had a particularly prolific quarter. When BBVA took top spot in the second quarter it was with a 4.76 percent share of the overall market. Mitsubishi’s $2.2 billion of activity in Q3, by contrast, represented more than 11.5 percent of the global total. With Mizuho involved in almost $1.3 billion of deals, the appetite of the Japanese banks is clear to see.