Moody’s Investors Service says that funding for infrastructure projects in Asia will demonstrate increasing diversity.
“The large infrastructure investment needs in Asia will drive innovation in financing structures and lead to the increased use of different forms of credit enhancement,” says Terry Fanous, a Moody’s Managing Director.
“In fact, funding diversity is key to delivering infrastructure investment in Asia,” adds Fanous.
Moody’s analysis is contained in its report titled “Infrastructure &Project Finance — Asia: Growing funding diversity to bridge infrastructure funding gap”.
Moody’s report explains that infrastructure needs in Asia are large when compared to historical volumes of debt raised by state-owned and privately-owned infrastructure companies.
$1.7 trillion per year needed between 2016 and 2030
According to estimates from the Asian Development Bank, Asia will need to invest $1.7 trillion per year in infrastructure between 2016 and 2030.
Meeting those investment needs will require the mobilization of diverse sources of private sector capital to supplement public sector expenditure.
“Recent precedent transactions for Asian infrastructure projects indicate that institutional investors are strongly attracted to Asian infrastructure and project bond issuance, even those with long-term amortizing debt features,” says Ray Tay, a Moody’s Vice President and
Senior Credit Officer.
“Favorable investor appetite and constraints on bank lending are likely to lead to more corporate infrastructure and project bond issuance,” adds Tay.
“Increased deal flow will enhance institutional investor familiarity with the infrastructure sector in Asia, and diversity by sector, geography and credit quality will result in a more robust market.”
And, the involvement of multilateral development banks — including the provision of credit enhancements — can mitigate credit challenges such as political risks that constrain investor appetite.
Moody’s points that the infrastructure sector has attributes that are suited to institutional investors’ strategic objectives, such as long tenors that facilitate asset/liability matching, portfolio diversification and credit characteristics that are attractive to long-term investors.
BOT relaxes rules to Curb Strong Baht
the Bank of Thailand (BOT) decided to relax regulations to facilitate capital outflows to help promote capital flow balance and lessen pressure on the baht.
The Thai baht has been under pressure due to imbalanced capital flows in the current environment of highly uncertain and volatile external conditions, the Ministry of Finance (MOF) and the Bank of Thailand (BOT) decided to relax regulations to facilitate capital outflows to help promote capital flow balance and lessen pressure on the baht.(more…)
Bank of Thailand cuts rate by 0.25% to 1.25 per cent
The latest cut brings the Bot’s policy rate to an historical low, which the bank maintained from April 2009 to July 2010 during the subprime global financial crisis.
On 6 November 2019, the MPC voted 5 to 2 to reduce the policy rate by 0.25 percentage point from 1.50 to 1.25 percent, effective immediately. Two members voted to maintain the policy rate at 1.50 percent.(more…)
Thailand’s loss of trade privileges with US is credit negative
The development is credit negative because Thailand’s export-oriented economy is in a difficult external environment given that a broad-based export slowdown and strong Thai baht are weakening the competitiveness of goods exporters and the country’s tourism industry.
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