Project Finance Beats the Crunch, According to Thomson Reuters Survey
LONDON, July 9 /PRNewswire/ — Project finance lending activity in the first half of 2008 rose 18% over the same period last year – driven by strong growth in the oil & gas and mining sectors.
The figures are released in the Thomson Reuters project finance survey published by Thomson Reuters Project Finance International.
Project finance lending rose from US$112.7bn in the first half of 2007 to US$133bn in the first half of 2008.
The power sector accounted for US$41bn with transportation US$26.6bn. Oil & Gas accounted for US$21.7bn followed by private finance initiative investments US$14.2bn and the petrochemical industry, US$9.6bn.
The US was the leading centre of activity, US$19.1bm, followed by Australia, US$10bn, UK, US$9.9bn, India, US$9.7bn and Spain US$9.3bn.
Project finance lending is split between loan and bond finance. The loan markets continued to grow – up to US$127.8bn in 2008 from US$103.7bn but the bond market dropped from US$9bn to US$5.1bn.
The credit crunch has made its impact on the project finance market. Loan margins have increased above 100bp over libor this year for most deals, nearly doubling in many cases over what could have been achieved a year ago. And the bond market has suffered with few deals transacted.
But demand from the various industrial sectors for project finance has been keeping volumes up. Investment in the power generation sector continued its strong growth – across both traditional thermal and renewable energy developments. Renewable energy accounted for US$14bn of the sector’s US$41bn with wind, US$9.4bn, and the newly emerging solar sector, US$4.6bn.
The Oil & Gas sector showed strong growth – up from US$8.9bn in the first half of 2007 to US$19.2bn in the first half of 2008. Mining shot up from US$1bn in the first half of 2007 to US$9.2bn in the first half of 2008.
Royal Bank of Scotland topped the loan league arranging table on US$9.2bn followed by SBI Capital of India, US$6.9bn, BNP Paribas, US$6.9bn, Calyon, US$5.5bn and SMBC, US$4.7bn.
Project finance sectors IH 08 (IH 07 in brackets) Power US$41bn (US$37bn) Transportation US$26.6bn (US$23.1bn) Oil & Gas US$21.7bn (US$8.9bn) PFI US$14.2bn (US$19.5bn) Petrochemical US$9.6bn (US$6.9bn) Mining US$9.2bn (US$1bn) Project finance countries IH 08 (IH 07 in brackets) US US$19.1bn (US$15.7bn) Australia US$10bn (US$9.7bn) UK US$9.9bn (US$12bn) India US$9.7bn (US$5bn) Spain US$9.3bn (US$3.8bn) Initial mandated lead arrangers IH 08 (IH 07 in brackets) RBS US$9.2bn (US$5.8bn) SBI Capital US$6.9bn (US$730m) BNP Paribas US$6.9bn (US$6bn) Calyon US$5.5bn (US$5.8bn) SMBC US$4.7bn (US$3.3bn)
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