EC launches consultation on infrastructure bond

EUROPE: The European Commission has launched a consultation on plans to create a bond to help create investment in Europe's infrastructure.

The European Commission plans to help developers with bond
The European Commission plans to help developers with bond

Europe 2020 Project Bond Initiative, which was announced by EU president José Manuel Barroso last year, aims to attract greater investment from private companies in infrastructure projects including energy.

In January, the EC called for EU member states to double their annual capital investments in renewable energy from €35 billion to €70 billion to ensure the 2020 targets are met.

The Commission suggested in its communication on the progress of renewable energy in the EU that the increased investment should mainly come from the private sector.

Under the bond scheme, developers would be able to issue bonds for specific projects. The EC said it would support the bonds by assuming part of the project’s risk. This would improve the rating of developer’s debt for the project.

There will be a limit to the EU’s liabilities under the scheme.

Speaking about the scheme, European Investment Bank president Philippe Maystadt said: "Infrastructure finance in Europe has suffered since the financial crisis and banks face new constraints on long term lending.

"Project bonds could be a way to attract capital from other investors, such as pension funds and insurance companies, and be a useful addition to traditional financing options."

Other areas earmarked for investment under the bond scheme are include transport and communications.

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