Skip to main content

Infrastructure Financing Instruments

  • Chapter
  • First Online:
Project Finance

Part of the book series: Management for Professionals ((MANAGPROF))

Abstract

In early period infrastructure investments were financed with government funds. Over a period of time, public deficits, increased public debt to GDP ratios, budgetary pressures compelled governments to reduce the level of public funds which were allotted to infrastructure. Banks were constrained to reduce infrastructure financing on account of steps taken to strengthen prudential regulation in the banking sectors. After the economic crisis, banks were faced with situation to take initiatives to repair bank balance sheets and build capital and liquidity buffers. In this context the role of alternative sources of financing to support infrastructure development by institutional investors is of paramount significance. The long term nature of the liabilities for many types of institutional investors and their need for suitable long term assets is strategically significant for infrastructural investment. Financing of infrastructure involve different financial structures and instruments. Loans and bonds comprise the largest component with respect to sources of infrastructure finance. Syndicated loans are pooled loans created by commercial or development banks. The Euro bond market took a center stage with respect to project financing since the 1960s. Standalone infrastructure projects can be financed by standardized instruments such as project bonds. Green bonds are corporate bonds, project bonds, and sub-sovereign bonds that finance investment in green infrastructure assets such as clean energy. Modern infrastructure finance includes mechanisms like direct lending and co investment platforms.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 54.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 69.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 99.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  1. Financing Instruments and Channels: Infrastructure financing instruments and incentives. © OECD 2015

    Google Scholar 

  2. Sawant, R.J. (2010), “Emerging Market Infrastructure Project Bonds: Their Risks and Returns”, The Journal of Structured Finance, 15, 4, pp. 75–83

    Article  Google Scholar 

Further Reading

Download references

Author information

Authors and Affiliations

Authors

Rights and permissions

Reprints and permissions

Copyright information

© 2022 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Kumar, B.R. (2022). Infrastructure Financing Instruments. In: Project Finance. Management for Professionals. Springer, Cham. https://doi.org/10.1007/978-3-030-96725-3_2

Download citation

Publish with us

Policies and ethics