2017年-世界发展银行全球_Argentina___Capital_Market_Financing_for_Infrastructure_66页_1mb

Argentina: Capital Market Financing for Infrastructure

Core Content Summary

This document provides an overview of Argentina's capital market financing for infrastructure, focusing on the role of public-private partnerships (PPPs), institutional investors, and the regulatory environment. It highlights recent developments in the country's financial markets, the challenges in attracting long-term investment, and the strategies that could help deepen the capital markets and support infrastructure financing.

Main Points

A. Capital Markets

• Sovereign Credit Rating: Argentina's improved sovereign credit rating has encouraged sub-sovereign and corporate bond issuance. In early 2016, the country re-entered international capital markets, leading to USD 8.4 billion and USD 4.4 billion in bond issuance by sub-sovereign and corporate entities.
• Lender Participation: Lenders have been relatively inactive in infrastructure financing due to the lack of tendered and commercially closed PPP projects. Their involvement is contingent on the regulatory framework for PPPs, project pipeline development, and macroeconomic conditions.
• Institutional Investors: Argentina lacks a robust institutional investor base with sufficient AUM to anchor infrastructure financing. The private pension system needs to be restarted, and the Sustainable Guarantee Fund (FGS) could be a potential source of financing if its governance and investment strategy are aligned with market demand.
• Long-Term Financing: Infrastructure projects typically require long-term debt financing due to the "J-curve" of cash flows. Systemic risks must be managed to provide lenders with confidence in project viability.
• Macro and Policy Risks: High inflation, foreign exchange risk, and policy uncertainty remain significant barriers to investment. While inflation is expected to decline in 2017, reaching single-digit levels is a medium-term goal.
• Procedural Barriers: Onerous account opening, KYC, and tax registration procedures deter foreign investors. The credibility of CNV as a regulator is also crucial for market development.

B. Infrastructure Finance

• Total Infrastructure Needs: Estimated at USD 155 billion, including the RenovAR program, transport, and water projects.
• RenovAR Program: The Ministry of Energy and Mines has successfully concluded two auction rounds, awarding 37 projects that will generate 1,167 MW of wind and 918 MW of solar energy. These projects have 20-year PPAs with CAMMESA.
• FODER Model: The Fund for the Development of Renewable Energy (FODER) has been used to support the RenovAR program. It includes a payment guarantee account to ensure electricity payments under PPAs, and the GoA has allocated USD 860 million to the fund. A USD 480 million World Bank guarantee facility supports private investors in the program.
• Private Capital Participation: The Ministry of Transport plans to involve 20 to 25 percent private capital in an USD 83 billion investment program over three years. The Ministry of Energy has also launched a USD 36 billion power generation program aiming to increase generation by about 20 GW by 2025.

C. Public Private Partnerships

• PPP Law and Framework: The 2016 PPP Law and initial regulations are positive steps, but the institutional framework for the PPP unit remains unclear. The PPP unit is now located within the Ministry of Finance.
• Project Pipeline: The PPP project pipeline is still developing, with potential projects in renewable energy, transport, water, and irrigation. The timing of project tenders depends on feasibility studies, regulatory development, and project prioritization.
• Market Barriers: The Odebrecht bribery scandal has impacted investor confidence in the region, potentially discouraging investment. However, it may also create opportunities for new market entrants.

D. Strategies for Supporting Capital Market Financing of Infrastructure

• Expand Capital Market Instruments: Encourage the development of new capital market instruments, such as longer-duration bonds, local currency bonds, and project bonds.
• Replicate FODER Model: Create a general infrastructure fund similar to FODER, which could provide financial support and credit enhancements for infrastructure projects.
• Technical Assistance: Provide technical support to the PPP unit to improve institutional capacity, refine the normative framework, and support market sounding activities.
• Institutional Reforms: Encourage insurance companies to offer new products, rebuild the private pension system, provide preferential tax treatment for closed-end funds, and support the establishment of REITs.
• Risk Management: Develop long-term hedging instruments to manage currency risk, and consider the securitization of government availability payments as collateral.
• Credit Guarantee Facilities: Explore options for expanding partial credit guarantee facilities, including contingent credit lines, first loss guarantees, and financial intermediaries.

Key Information

• Bond Issuance: Sub-sovereign and corporate bond issuance since 2016 has reached USD 8.4 billion and USD 4.4 billion, respectively.
• RenovAR Program: The program has attracted significant private investment, with Round 1 and Round 1.5 being oversubscribed.
• FODER: A USD 860 million fund supports renewable energy projects, with a payment guarantee account ensuring electricity payments under PPAs.
• PPP Law: The 2016 PPP Law is a first step, but further legislation and regulation are needed to define the institutional framework and responsibilities.
• Infrastructure Investment: The Ministry of Transport has planned a USD 83 billion investment program with 20 to 25 percent private capital, and the Ministry of Energy has launched a USD 36 billion power generation program.
• Banking Sector: The banking sector remains stable with a regulatory capital to risk-weighted assets ratio of 14.4 percent, exceeding Basel III requirements. NPLs have decreased from 5.20 percent in 2005 to 1.74 percent in 2015.
• Syndicated Loans: Syndicated loans in Latin America have declined over the past decade, but could rebound. In 2016, total syndicated loan volume was USD 35.4 billion on 115 transactions.

Summary of Key Tables and Figures

Conclusion

Argentina has made progress in re-entering international capital markets, with bond issuance supporting infrastructure projects. However, challenges remain, including macroeconomic instability, lack of institutional investor capacity, and procedural barriers. To deepen the capital markets and support infrastructure financing, the country needs to expand capital market instruments, reform the regulatory framework, and develop a robust project pipeline. The FODER model and potential modifications to credit guarantee facilities could serve as useful examples for broader infrastructure financing.