Sustainable infrastructure was high on the agenda at this year’s Asian Development Bank annual meetings in Fiji, where climate change and ocean health have a pronounced impact on everyday life. The capital markets are also showing a growing interest in sustainable development, but Asia is still a long way from harnessing the market’s full potential. IFR’s latest in a series of knowledge-sharing seminars with the ADB set out to look at the role of the capital markets in providing long-term financing for Asian infrastructure. Across the region, the vast majority of infrastructure projects are funded by local banks and local governments, leaving the growing pool of institutional capital untapped. Efforts to connect institutional investors with long-term investment opportunities have led to a number of recent landmark financings, including project-related bond issues in US dollars and local currencies and Asia’s first securitisation of project finance loans.
Clifford Capital’s CEO, Clive Kerner, was a panellist at the IFR Asia Asian Development Bank Roundtable 2019, which discussed several initiatives to bring more infrastructure-related assets into the local and international bond markets. Clive highlighted that there is an increasing role for structured finance in terms of facilitating the transfer of project finance loans from bank balance sheets into the capital markets and thereby crowding in institutional debt. Specifically, he discussed how Clifford Capital was able to come to market with Asia’s first project finance securitisation and its benefits, which include providing institutional investors with access to investment grade securities and exposure to a high quality diversified Asian infrastructure credit portfolio. Clive also discussed potential future enhancements such as a warehousing facility in the works to give banks an easy way to recycle their capital.