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Financing transport infrastructures in Europe Roma, 12.12.2014

Financing transport infrastructures in Europe Roma, 12.12.2014. Carlo Secchi, Coordinatore Europeo TEN-T. TEN-T Corridors. 2. The added value of investing in key Transport Infrastructure. Investing in transport is investing in growth and competitiveness

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Financing transport infrastructures in Europe Roma, 12.12.2014

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  1. Financing transport infrastructures in EuropeRoma, 12.12.2014 Carlo Secchi, Coordinatore Europeo TEN-T

  2. TEN-T Corridors 2

  3. The added value of investing in key Transport Infrastructure • Investing in transport is investing in growth and competitiveness • Underinvestment in Infrastructure (new infra & maintenance) has negatively affected the economy, with a pro-cyclical effect • IMF study: it is time to invest in infrastructure – high return for the economy when targeted towards adequate projects & via debt issuance • Need optimal allocation of scarce public resources (right projects at the right time) & ensure Additionality

  4. Demand is there…. • Huge investment needs to integrate European transport system, for better using existing infra & greening of transport • €+600bn investments needs identified on corridors, €127bn of which potentially suitable for IFIs in the next years (projects already prepared or close to implementation) • The remaining ones needs support at EU & National level, with possible combination of grant funding (National, Cohesion Policy, CEF), public financing (CEF, EIB, NPBs, Institutional investors….) and private sector investments

  5. …but needs to be triggered • Focus on a stable, well-identified project pipeline: need for Technical Assistance and capacity building • Certainty on the Regulatory framework, smooth and predictable project appraisal and consent procedure – including on State Aids, to be screened ex ante • Availability of public guarantees is a key factor for allowing private capitals to come in: larger role for EU Guarantees, favorable treatment of national ones vis-à-vis GSP • Potential and actual Revenues and Benefits related to projects to be monetized (e.g.: earmarking, cross-financiang, ETS widening for internalisation of external benefits, )

  6. How to stimulate the financial offer… Factors hindering project funding to be assessed • Regulatory issues • Complex procurement & permitting procedures, • Clarification of state-aid rules • Statistical treatment of PPPs • Solvency II, Basel III, • Rules favouring long-term investments by investors • Life-cycle approach • Opportunities in cross-subsidisation, user-pay, Eurovignette, but also to bring-in efficiency throughout the project life (benefiting from the added value it generates)

  7. Project Company will divide its • debt into two layers: • A Senior tranche, which will be issued as Project Bonds and placed with institutional investors (insurance companies, pension funds, etc.) • A (smaller) Subordinated tranche, which would be underwritten by the Commission and the EIB, in a funded (loan) or unfunded (guarantee) form. • Subordinated debt maximum 20% of total debt • EIB and EU to receive a fee and/or credit margin Project Bond Investor Equity & Quasi-equity Project Bonds Target rating minimum A- EIB Sub-debt SPV Project Costs e.g.: Project bonds Bond Issue and underwriting up to 20% of total Bond issue A mechanism to “credit enhance” senior debt and thus attract capital market investors European Investment Bank

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