European Investment Bank Financing Instruments for TEN-T

Transcription

1 Financing Instruments for TEN-T SESAR Implementation: Workshop on Financing and Funding Brussels, 17 February EIB Experience in TEN-T and the Air Transport Sector 2. EIB Financing Instruments Supporting TEN-T Projects 3. Financing SESAR Implementation 1 1

2 EIB Support of TENs and PPPs TENs development is a priority objective of EIB. In the PPP segment the EIB has lent over EUR 25 billion since EUR bn EUR bn TEN In 2009 EIB financed EUR 13.9bn in Trans-European Networks (TEN) infrastructure within the EU. This reflects EIB s increasing presence in order to fill the liquidity gaps left by commercial lenders in the aftermath of the financial crisis. TEN-T projects represent on average 86% of the total TEN lending. EIB PPP Financing Since 1990, EIB has progressively broadened geographic and sector spread of its PPP lending. The Bank is now one of the major funders of projects in Europe. Portfolio of 120 projects and investment of around EUR 25 billion. Annual signatures averaging above EUR 2 billion since 2000, reaching EUR 3.4 billion in 2010 with EUR 2.4 billion in the transport sector EIB Experience in the Air Transport Sector Lending to air transport projects represents a major share of EIB s Transport sector activity Between 2000 and 2010: The EIB has financed over 70 air transport projects Providing loans over EUR 15 billion Representing around 11% of its entire Transport sector lending The EIB finances projects in four main areas within the sector: Airport development Air Traffic Management Research & Development Aircraft acquisitions (only until 2007 due to change in Transport Lending Policy) 2

3 EIB Experience in the Air Transport Sector Recent projects Airport Development New Berlin Brandenburg Intl. Airport Expansion and provision of a new passenger terminals at Dublin, Munich, Nairobi, Frankfurt... Upgrade and expansion of all the aircraft pavements at Chisinau Airport in Moldova Large scale upgrade of the baggage handling system at Amsterdam Schiphol Airport Air Traffic Management Upgrade works to all AENA controlled air navigation systems in Spain Upgrade works to all NAV controlled air navigation systems Portugal New ACCs at Belgrade and Zagreb Finmeccanica (Italy) to develop innovative aircraft fuselage structures R&D of a new generation aircraft engine undertaken by Snecma, part of the Safran Group (France) Airbus R&D Rolls-Royce R&D Research & Development Soyuz launch facilities at Guayana Aircraft Acquisition No lending for aircraft acquisitions after 2007 due to change in lending policy (exception: SATA) Prior to 2007 the EIB was active in this area providing financing for acquisitions at SAS, TAP, Iberia, Austrian, Cargolux, Air France, LOT, MALEV, TAROM, Egyptair, THY and others Lessons Learnt and SESAR Are past air transport projects financed by the EIB relevant in the context of SESAR? EIB has substantial experience in the air transport sector and has lent extensively to projects across Europe HOWEVER EIB financing for nearly all projects involved the same instrument: Standard EIB loan with a state or first class bank / single corporate signature guarantee without EIB taking direct project risk or using innovative financing solutions Structure of EIB financing in these projects bears limited relevance to the issues/complexity/volumes presented by SESAR 3

4 1. EIB Experience in TEN-T and the Air Transport Sector 2. EIB Financing Instruments Supporting TEN-T Projects 3. Financing SESAR Implementation 2 EIB Financing Instruments EIB has at its disposal a wide and flexible portfolio of financing instruments to support TEN-T projects Standard Loans Traditional instrument Guaranteed basis EIB lending Represents the bulk of EIB s lending volumes Banks Direct Loans Intermediated Loans Public Sector Structured Finance Facility (SFF) Established in 2001 Project finance with direct project risk Project SPV Expands the ability of EIB to provide financing Allows lending to projects with a higher risk profile Allows for more flexible financing solutions Mezzanine LGTT Equity through Funds 4

5 Instruments Overview Standard EIB Loans Represents close to 80% of EIB s overall TEN-T lending volume Either fully guaranteed or guaranteed during construction and early operation Guarantee from sovereign, bank or corporate Provided on a direct or bank-intermediated basis Recipient is either public sector borrower or project company on a project finance basis Instruments Overview SFF Project Finance Loans with direct project risk Represents around 20% of EIB s overall TEN-T lending volume Real project finance loan with the EIB taking direct project risk Provided on a pari passu basis with commercial banks already during construction period Recipient is ring-fenced project company (SPV) Commercial Banks Senior Bank Debt Equity & quasiequity SPV Project Costs 5

6 Instruments Overview Loan Guarantee Instrument for TEN-T Specialized instrument jointly developed by the EIB and the EC Commercial Banks Provides contingent mezzanine debt thereby protects senior debt in projects exposed to traffic risk Mitigates traffic risk during early operation protecting against traffic downside scenarios Improves capital structure and senior debt credit quality Lowers refinancing risk in Mini- Perms structures Potentially allows for funding cost reduction Contingent mezzanine facility LGTT Up to 20% of Senior Debt Senior Bank Debt Equity & quasiequity SPV Project Costs Instruments Overview Investment Funds / Marguerite EIB invests equity in selected infrastructure funds with investment mandate covering TEN-T to Provide additional sources of equity finance for infrastructure projects Enable it to extend its reach to eligible target projects beyond its traditional lending activities Overcome shortage of equity in certain sectors or geographies As of late 2010 has invested in close to 20 funds Marguerite Fund 2020 European Fund for Energy, Climate Change and Infrastructure, established in 2009 Infrastructure investment vehicle for long-term public and private institutional investors Invests in projects that enhance security and independence of EU energy supply, contribute to greenhouse gas emissions reduction, reduce transmission/transportation costs Investment mandate specifically includes TEN projects 6

7 1. EIB Experience in TEN-T and the Air Transport Sector 2. EIB Financing Instruments Supporting TEN-T Projects 3. Financing SESAR Implementation 3 Financing Solutions for SESAR How could the EIB contribute to potential financing mechanisms for SESAR deployment? Can the existing EIB instruments be used to provide financing to SESAR projects? Standard guaranteed loans provided to ANSPs along the basis of past EIB loans to the sector? Project finance loans provided to larger, individual, ring-fenced projects? LGTT provided to individual projects with quantifiable traffic risk? Can new joint instruments developed by the EC and EIB be among the innovative financing solutions sought? New instruments issued by the proposed SESAR Deployment Fund or used by a welldefined group of projects? At this stage it is not possible to judge 7

8 Main Issues Much better understanding of the actual projects is indispensible especially with regards to critical structuring issues in order to allow private capital or EIB participation Funding sources Is private capital needed? Is debt financing necessary? Is a PPP approach acceptable? Risk allocation Risk of deployment (being abandoned due to policy change)? Risk of obsolescence of technology put forward by SESAR? Risk of compatibility with other major emerging systems? If private sector capital is to be used (debt or equity) core parameters need to be established before financing solutions can be devised and analysed in a meaningful manner Projects vs. policy objectives Clearly defined projects or group of similar projects Clear cost-benefit analysis Sound business cases Established eligibility and economic benefits Loans vs. grants Clearly defined borrowers Cash-flows to service debt (and provide fair return to equity investors) Are revenues of the borrower linked to the assets created? Can ring-fenced (group of) projects be structured? Investment schedule: investment with firm longstop date or ongoing investments in the future? 8