NEW YORK–(BUSINESS WIRE)–The 2018 private placement market recorded $85 billion in debt issuance,
of which project financing accounted for around 30% ($25 billion),
according to Kroll Bond Rating Agency (KBRA) estimates. The private
placement market continued to be a relatively attractive funding source
for issuers looking to put in place long-term stable financing. However,
competition among banks and institutional investors continued as the
amount of capital to be invested increased year over year. The increased
competition resulted in the financing of nontraditional revenue streams,
such as merchant cash flows for wind and solar projects. The private
placement market last year also recorded a few transactions that are
typically financed in the Term Loan B market. However, these debt
placements came at a cost to the project sponsors as they had to hedge a
large portion of revenues and agree to stricter structural provisions.
The competitive pressure also resulted in lower financing costs for some
in-demand projects. This dynamic was most pronounced in the renewable
energy sector, which experienced declining rates on rising Treasury
prices, mainly due to reduced credit spreads.
KBRA’s Project Finance group has published an article discussing some
recent market trends, credit performance of certain sectors and its
expectations for 2019.
To view the report, please click here.
Giudici, Senior Managing Director
Marisol Gonzalez de Cosio, Senior Director