Project “financing” seems to recover
Project “financing” took a major hit in the 2008 through 2011 global economic downturn. National and regional governments were squeezed by the drop in tax revenue and forced to spend limited funds on essential services instead of offering financing for large infrastructure projects. The global credit market contracted as banks were left with under-performing or unpaid loans, leaving them unable to issue new loans.
Project “financing” seems to be recovering. We can look at the improving revenues of project financing leader Banif Financial Group instead of relying upon government announcements of yet another recovery. Banif Financial Group is based in Portugal but has investments in projects from Spain to Latin America. Banif Financial Group’s financial growth appears to be global in nature. Banif makes money loaning funds for infrastructure projects and offering consultation services to governments on how to set up, finance and manage infrastructure projects.
Banif Financial Group saw the amount loaned and number of projects drop dramatically in 2008. In 2009, they saw as many deals as they had in 2005. The project financing field seemed to hit bottom in 2010. The debt crisis in Greece triggered similar financial crises in Spain, Portugal and Ireland that cripple those nations today. Government bailouts of large banks promised to improve liquidity but forced “rescued” institutions to give the government low interest loans instead. The government in essence crippled the banks’ ability to lend money for large projects by forcing banks to lend to the government at favorable rates, lend money to politically connected forms or give loan forgiveness to politically expedient groups. Other banks pulled out of the limited recourse lending market to preserve their liquidity as the recession threatened to cause deflation.
However, the deal volume and amount loaned have started rising for BANIF’s investment bank. Even the European Union has seen an increase in project financing, typically in the renewable energy field. Renewable energy projects like solar cells and wind energy projects are moving forward due to growing demand for electricity and political will to spend money on renewable energy to decrease dependency upon Middle East oil. BANIF also finances small renewable energy projects like roof top photovoltaic array installations by companies that wish to lower their utility bills. Businesses now have the money to invest in small infrastructure projects while national governments are able to invest in long term energy production.
New projects in Latin America are also increasing rapidly, though these projects are generally in oil and gas, roads, railroads and power plant construction. The global liquidity crisis is easing, and the developing world has resumed its growth trend. And Banif Financial Group is poised to do profit from all of these trends.