EIB s Debt Financial Instruments under the Connecting Europe Facility

Transcription

1 EIB s Debt Financial Instruments under the Connecting Europe Facility 2015 CEF Energy Info Day Brussels, 16 th March 2015 C Murphy & A Zambrano European Investment Bank 1

2 A short outline CEF Overview of EIB Debt Financial Instruments under CEF ENERGY Project pipeline European Investment Bank 2

3 Overview of Debt Financial Instruments under the Connecting Europe Facility European Investment Bank 3

4 EIB financing solutions European Investment Bank 4

5 The CEF toolbox of Debt Financial Instruments Products Greenfield Infra Projects PBCE Capital markets Senior Loans Project Finance Subordinated Loans Banking market CEF (EIB/EC) Instruments Corporates Guarantees Senior Corporate Subordinated Corporate Corporates Airports Ports Public Utilities European Investment Bank 5

6 CEF Debt Financial Instrument Toolbox Credit Enhancement of Project Bond (PBCE) Example: Enhancement of the bond issue for grid connection project (such as Greater Gabbard/Gwynt y Mor projects in UK) Credit enhancement of Bank Loans (subordinated or as a guarantee) Example: Credit enhancement of bank loans to a PPP roads project, such as enhancement of a bond issue plus bank finance for the A7 motorway PPP project Germany Senior/Subordinated loans or Guarantees for Corporates Example: Subordinated debt to a TSO to support borrowing capacity for new investments and expansion European Investment Bank 6

7 Blending Financial CEF instruments The utilization of CEF Financial Instruments can be combined with Grants in a sequential process that demonstrates that Sponsors have exhausted all possible financing alternatives and Grants are needed to close the financing gap to make the Project happens Regular Grant Process with the EC EC decides Grant on the application Sponsor PCI Project Sponsors shall discuss with the EIB to structure the financing using CEF FI / regular loans EIB Financing Under CEF FI or regular lending products Financing Gap need for grant to make the project feasible is detected European Investment Bank 7

8 EIB project cycle Project based appraisal to select sound and sustainable projects supporting EU Policy objectives

9 Some lessons learned from project bond financings A significant leveraging tool for EU funding: over 25x in pilot phase, expected to increase with CEF given the portfolio effect. A product that can mobilise significant additional funding and market appetite: In 2013, the Castor project mobilised EUR1.4 billion in funding and the UK OFTO transactions were heavily oversubscribed; both delivering highly competitive financing. Proven useful from BBB to AAA countries up to 3 notches uplift in bond rating: Potentially bring bond ratings above sovereign ratings. Enhanced bonds proved competitive against bank solutions (both in terms of pricing and maturity). May be used for greenfield projects with deferred drawdown. European Investment Bank 9

10 Important Considerations Use of Financial Instruments: limited amount of grants available under CEF (no grants under EFSI) the leverage effect of financial instruments makes then efficient Conclusion: financial instruments have an important role to play Upstream engagement by EIB in working with Sponsors on use/structuring of financial instruments on prepared projects once a project is approaching financing stage Financial Instruments can be blended with grants European Investment Bank 10

11 Evolving ENERGY Project Pipeline European Investment Bank Group 11

12 CEF Pipeline under development - PCIs Energy Sector Project Name Country Number Projects Sector Status CAPEX Indicative (EUR m) Debt size Potential Financial Instrument Indicative CEF FI CEF FI Contribn Trangaz Gas PCIs Romania 3 Gas Structuring 1, Bulgaria PCIs program Bulgaria-Greece 9 Gas and Elect Structuring 1, LNG KrK Croatia 4 Gas Structuring 1, Ambergrid Lithuania-Poland 2 Gas Early stage Eleclink Uk-France 1 Electricity Structuring TAP Greece-Italy 1 Gas Early stage 4,500 3, Midcat and Electricity Spain-France 2 Gas and Elect Early stage Italy France Italy-France 1 Electricity Structuring Nemo Project UK-Belgium 1 Electricity Structuring UK-Norway Interconn. UK-Norway 1 Electricity Early stage LIPO interconnector Poland - Lithuania 1 Electricity Structuring Poland - Czech Republic Pl- Cz Republic 2 Electricity Structuring Total 28 12,100 8,220 1, Potential Leverage

13 Pipeline development initiatives Further pipeline identification activity: Engagement with Sponsors and Investors: identification of financing needs and scope for financial instruments Engagement with Corridor Groups: focus linked to corridor priorities and project readiness Screening of EFSI Investment Task Force lists for CEF eligibility and potential for debt financial instrument financing (with EFSI?) Discussion with INEA to identify projects not successful in the current CEF call but with potential for debt financial instrument financing GOAL: IDENTIFY PROJECTS FOR FINANCIAL INSTRUMENT FINANCING IN EACH MEMBER STATE European Investment Bank 13

14 EFSI impact on debt financial instruments Selection criteria and products under EFSI are being designed/discussed but expectations are that: EFSI will broaden eligibility: CEF is focused on Projects of Common Interest while EFSI is expected to have a broader remit in terms of sectors and type of projects e.g. renewables Similar debt financial instruments on a larger/wider scale: EFSI should have a positive impact on pipelines for instruments both in terms of number of projects and amounts available Challenge is in pipeline identification: as for CEF, the challenge is not only the availability of financing resources BUT the readiness of projects to be financed European Investment Bank 14

15 Cormac Murphy and Adrian Zambrano Project Bonds and Structured Finance New Products and Special Transactions EUROPEAN INVESTMENT BANK European Investment Bank 15