Europe, The Middle East & Africa

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Philip Roberts, Head of Energy & Natural Resources Structured Finance Office for Europe, Middle East and Africa (London)
Philip Roberts,
Head of Energy & Natural Resources Structured Finance Office for Europe,
Middle East and Africa
(London)
Phillip Hall, Head of Infrastructure & Transportation Structured Finance Office for Europe, Middle East and Africa<br>(London)
Phillip Hall,
Head of Infrastructure & Transportation Structured Finance Office for Europe,
Middle East and Africa
(London)
Trophy Deals in 2013:
With two very strong market leading teams, it is very difficult to distinguish one highlight so across both sectors, our key deals for the year would be:
Power & Renewables - London Array
London Array is the world’s largest operational offshore wind farm with a capacity of 630 megawatts where we acted as financial advisor to one of the shareholders, Masdar of the United Arab Emirates. The wind farm is now fully constructed, and was recently opened by David Cameron, Prime Minister of the UK. It is a significant achievement in renewable energy that will be capable of generating enough energy to power nearly half a million homes and reduce harmful CO2 emissions by over 900,000 tonnes a year. It was the first time an unincorporated joint venture structure has been used to finance non-recourse debt on an offshore wind farm. We also financed the offshore transmission asset connecting the wind farm to the onshore grid network which was a transaction sponsored by Mitsubishi Corporation and Macquarie. BTMU acted as financial advisor, lender, and interest rate swap provider on the wind farm, and as lender, interest rate, and inflation swap provider on the offshore transmission asset.
Infrastructure - Thameslink
The team continued to build on our success in the UK rail sector with the closing of the landmark £1.6 billion Thameslink PPP project, which overcame many hurdles and obstacles along its five-year procurement process, including a change in government and various reviews over “Value for Money”. The project attracted 20 lenders, some of which were previously not so active in the project finance space, and as the second major rolling stock deal to close with long-term funding in the UK, it provides further evidence of a recovering bank market. BTMU played a key role as one the lead structuring banks, Mandated Lead Arranger, hedge execution bank, and hedge provider.
Market Reflection:

Notable conditions and developments include:

  • -Consistency from Japanese and German banks as core lenders to the project finance sector
  • -Strong recovery in overall liquidity driven by the return of a number of traditional European project finance bank lenders across the tenor spectrum following (a) easing in their access and cost of liquidity and (b) the conclusion of overly aggressive balance sheet right-sizing exercises
  • -Lenders’ increasing willingness to be active outside their core domestic / regional markets
  • -Further evidence of institutional liquidity as an additional but often complementary source of liquidity for project finance to that provided by the bank market - with a particular focus on the infrastructure sector
  • -Overall increased competition resulting in a clear downward pressure on pricing and increased tenors.
2014 Market Forecast:
  • -Maintained shift in deal volumes away from traditional Western European economies to Middle East & North Africa and Eastern European markets
  • -Year of the jumbo deal with a number of very large-scale financing needs anticipated in the energy sector in Eastern European markets - which will look to test the overall capacity of the recovering bank lender market
  • -Increasing scope for the return of underwriting as sponsors look for speedy execution
  • -Maintained downward pricing pressure, at least in the first half of 2014 alongside sponsors seeking more borrower - friendly financing structures
  • -Increased activity via "amend and extend" processes as sponsors who financed post-2008/9 seek to take advantage of improved market conditions without undertaking a full refinancing process.