Welcome to the 2012 Project Finance International Yearbook. We look back at a year of two halves and forward to uncertain times. The first half of 2011 was generally decent, with banks starting to mutter more and more about the problems associated with falling margins. Bond issuance volumes were coming back. Then into July and on to August, it all went horribly wrong.
Welcome to the 2011 Project Finance International Yearbook. We look back at a transitional year where austerity has started to bite into the OECD projects market but the emerging markets, particularly the leading BRIC economies, are striding forward. It is no accident that a leading emerging markets bank is our bank of the year.
Welcome to the PFI Yearbook 2010. And vive la France! It has not necessarily felt like a French year, 2009, but looking at our awards it certainly appears to have been so. French banks, sponsors and equity investors all take pride of place. In part, this was a coincidence – certainly all the awards were viewed and judged separately – but maybe there is a common link.
If anything, reading back to the Foreword in the Yearbook this time last year, the credit crunch took its time to take hold in 2008. Last year, I said it would sweep though the system and "when complete, the system will take years to recover". That is what happened but only come September when Lehman collapsed.
Well, it was some year! One minute, the bond and loan markets were flying, the next they were drowning. It really was that quick. In early June a UK private finance initiative (PFI) hospital wrapped linker bond, North Staffs, was priced at 45.5bp – a record low. By early July, Peterborough hospital had come in at 65.5bp and then the credit crunch really hit. By year-end, the Broomfield hospital deal had limped in at 107.5bp. But despite the more than doubling in price, at least Broomfield got done.
2007 will be some year if it keeps pace with 2006. Progress, and budgets, were made on all fronts in 2006. There were some reverses in the year but, by and large, all the challenges were met and overcome. The market is currently in a 'hot' state. One, older, infrastructure banker said he had waited a career for his sector to be in favour. Indeed Mr Burnham.
Everything got bigger in 2005 in project finance, driven by the continuing boom in the general credit markets and the high energy/commodity prices. But not everything. Margins got smaller. Competition among banks for assets really started to hot up. In the hottest market of all, in the Middle East, marins in the 50bp range for billion dollar plus deals became the norm. By the end of the year, an uncovered medium term financing in Nigeria was priced at 175bp.
The project finance market in 2004 was certainly in an upbeat mood. The loan syndication market for projects was back. The gas market was in vogue. Infrastructure and the global PPP markets continued to develop, albeit perhaps slower in terms of deals closed. And the power market showed signs of recovery with some new deal flow.
If 2003 promised a bounce in power prices and more activity in the infrastructure and oil & gas markets according to last year's Foreword, what does 2004 bring? Perhaps a little less luck in off-the-cuff forecasts but as ever the trends for next year have already to some extent been set this year.
2002 was the year when the power markets took a real bath. In the US the Enron hurricane was so big it swept up many other energy companies. In the rest of the world those same US developers pulled back sharply leaving behind few new project opportunities. The name of the game towards the end of the year was to avoid provisions. Yet other sectors still thrive - oil & gas and infrastructure. By Rod Morrison.
2001 has been a game of two halves. The first part a gentle decline in the world economy, some nervousness, a general feeling of financial unease after the collapse of the stock market in 2000 and events such as the California power crisis. After the summer holidays, the situation turned ugly with September 11thovershadowing everything. But in addition there were other events such as Enron and Railtrack. We all look foreword to 2002. By Rod Morrison.