OECD, 7th Meeting on Public-Private Partnerships - Robin BURNETT

75 %
25 %
Information about OECD, 7th Meeting on Public-Private Partnerships - Robin BURNETT
News & Politics

Published on March 6, 2014

Author: OECD-GOV

Source: slideshare.net


This presentation by Robin BURNETT was made at the 7th Meeting on Public-Private Partnerships held on 17-18 February 2014. Find more information at http://www.oecd.org/gov/budgeting/ppp.htm

Global Infrastructure: How To Fill A $500 Billion Hole Robin Burnett Director Infrastructure Finance Ratings February 17, 2014 7th ANNUAL MEETING OF SENIOR PPP OFFICIALS OECD Conference Centre, Paris Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Copyright © 2013 by Standard & Poor’s Financial Services LLC. All rights reserved.

Rising Infrastructure Funding Needs… We estimate annual global infrastructure needs of $3.4 trillion. The bulk will be split about evenly between the U.S., the EU, and China. More Than $57 Trillion Needed For Infrastructure Through 2030 9.5 Global investment, 2013-30 $ trillion, constant 2010 dollars. 57.3 11.7 12.2 4.5 0.7 2 16.6 Roads Rail Ports Airports Power © Standard & Poor’s 2014. Source: McKinsey & Co. 2 Water Telecom Total

... And Retrenchment Of Public Spending … The drop in the public investment ratio was steepest where the crisis struck hardest and where the need for fiscal consolidation was most intense. According to EC data, by 2014 compared to 2009, the public investment ratio would fall by 72% in Spain; 70% in Ireland; 62% in Cyprus, 58% in Greece and 54% in Portugal.

… That Is Expected To Persist Over the past few decades, public spending on infrastructure as a share of GDP has in most advanced economies been stagnant or falling. The deep cuts in public investment spending in countries at the center of the eurozone crisis offer an example of how public sector infrastructure spending may fare in times of financial stress. This leads us to believe that further retrenchment in government infrastructure spending may lie ahead.

So How Big Will The Gap Be? Government investments increase to 3.5% of GDP Projected Annual Funding Gap Bil. $ 1500 Apple Apple Government investments of 3% of GDP Microsoft 1000 Google Government investments drop to 2% of GDP Berkshire Hathaway 500 General Electric Wal-Mart 0 Downside Base Case Base Case Base Case Upside Source: Company market values at 31 December 2013 from FT Global 500 December 2013. 5

Where Could The Funds Come From? A rise in institutional investors' allocations to 4% could provide about $200 billion per year in additional funding. If banks continue to lend to projects at current levels of about $300 billion per year, these inflows could fill the gap left by the governments. Breakdown of Institutional Investor Active in Infrastructure By AUM Insurance Companies Asset Managers Private Sector Pension Funds Foundations 16% 8% 0% Endowment Plans Family Offices Public Pension Funds Sovereign Wealth Funds 1% 11% 1% 19% 1% AUM – Assets under management. Source: Preqin Infrastructure Online. © Standard & Poor’s 2014. 42%

Infrastructure Has Become Attractive Pension plans have increased allocations to alternative classes with infrastructure up from 8% to 24%. Percentage Of Canadian Plans With Allocation To Alternative Assets Has Risen Project bonds represented 16% of the project market in 2013, doubling to $55 billion. (%) Nearly 60% of investors say they will increase allocation to infrastructure in 2014. 2010 results 40 35 30 25 20 15 10 5 0 *Domestic and nondomestic. Source: Mercer 2013 Asset Allocation Survey © Standard & Poor’s 2014. 2013 results

Public-Private Partnerships Are Still Very Important • As markets and governments develop new approaches to completing highly essential infrastructure projects, we believe that initiatives such as the Canadian government's C$1.25 billion five-year contribution to the Canadian P3 Fund and the U.K.'s Private Finance 2 will continue to draw financing using public-private partnerships. • Advantages to this model are that it includes some level of private investment and that there is, typically, a transfer of construction and operating risk to the private party: o In the U.S., interest is growing as several states build robust PPP programs. California, Florida, Indiana, Texas, and Virginia are among those that have initiated PPPs o In Europe, we expect the trend of increased issuance in the social and economic infrastructure sectors to continue.

Catching Institutional Investors’ Eye Benefits • Low default rates and high recovery rates; Global Cumulative Default Rates By Rating (1992-2012*) % • Higher yields; 35 • Diversification; and 30 • Ability to match long-term assets and liabilities. 25 AAA AA A BBB BB B CCC/C 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Source: “Project Finance Default And Recovery: Shale Gas Fuels Rise In U.S. Defaults,” published on the Global Credit Portal 09-Aug-2013. *Calculated by multiplying non-default marginal rates and then subtracting from 1 to get the cumulative default rate. 9

Unlocking Long-Term Infrastructure Investments 4. Ongoing Strong Project Credit Characteristics 2. Increased Transparency Of Project Data 7. Minimal Political And Regulatory Risk 8. Pricing And Yields That Are Attractive For Lenders And Borrowers 1. A Visible Project Pipeline And Standard Transaction Structures 6. Support Packages That Reduce Construction Risk 3. A Regulatory Regime That Encourages Insurers To Invest 10 10. Liquidity And Asset Diversification 9. Ongoing Strong Collateral And Security, With High Rates Of Recovery 5. Supportive Credit Enhancement Structures For Project Bonds

Related Articles Global Infrastructure: How to Fill A $500 Billion Hole, Jan. 16 2014 Cracks Appear In Advanced Economies' Government Infrastructure Spending As Public Finances Weaken, Jan. 14 2014 Top 10 Global Investor Questions For 2014: Public-Private Partnerships, Jan. 9, 2014 S&P Investors' Appetite For Infrastructure Assets Boosts EMEA Project Finance, Nov. 13, 2013 Italy Looks To Institutional Investors To Support Its Infrastructure Finance, Nov. 11, 2013 How To Unlock Long-Term Investment In EMEA Infrastructure, Oct. 4, 2013

Thank You Robin Burnett Director T: +44 20 7176 7019 | F: +44 20 7176 3691 robin.burnett@standardandpoors.com Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Copyright © 2013 by Standard & Poor’s Financial Services LLC. All rights reserved.

Copyright © 2013 by Standard & Poor’s Financial Services LLC. All rights reserved. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. STANDARD & POOR’S, S&P, GLOBAL CREDIT PORTAL and RATINGSDIRECT are registered trademarks of Standard & Poor’s Financial Services LLC.

Add a comment

Related presentations

Cfbp barometre octobre

Cfbp barometre octobre

November 10, 2014

VITOGAZ vous présente: CFBP baromètre gpl carburant

Ata Escrita da 16ª Sessão Ordinária realizada em 16/10/2014 pela Câmara de Vereado...

Ata Escrita da 10ª Sessão Extraordinária realizada em 16/10/2014 pela Câmara de Ve...

Rx1 nasil kullanilir

Rx1 nasil kullanilir

November 8, 2014

Rx1 zayiflama hapi, kullanimi nasildir, yan etkileri var mi? yan etkiler var ise h...

Esposto del MoVimento 5 Stelle sul Patto del Nazareno

Slide Servizi postali

Slide Servizi postali

November 7, 2014

Slides per i servizi postali presentati in occasione dell'incontro azienda e organ...

Related pages

7th Annual Meeting of Senior Public-Private Partnerships ...

7th Annual Meeting of Senior Public-Private Partnerships Officials, OECD Conference Centre, ... Mr. Robin Burnett, ...
Read more

OECD, 7th Meeting on Public-Private Partnerships - Robin ...

×Close Share OECD, 7th Meeting on Public-Private Partnerships - Robin BURNETT
Read more

OECD, 7th Meeting on Public-Private Partnerships - Gilles ...

... made at the 7th Meeting on Public-Private Partnerships held on ... OECD, 7th Meeting on Public-Private ... on Public-Private Partnerships - Robin BURNETT.
Read more

Working Party of Senior Budget Officials - oecd.org

MEETING SUMMARY 7TH Annual Meeting on Public-Private Partnerships OECD Conference Centre, ... Mr. Robin Burnett, ...
Read more

Our Contributors | Perspectives

... business models and partnerships ... Ms Cousin guides the World Food Programme in meeting urgent food ... Kofi A Annan was the 7th Secretary ...
Read more

EPSA 2011 Research Report by Claude Rongione - issuu

EPSA 2011 Research Report | Issuu is a digital publishing platform that makes it simple to publish magazines, catalogs, newspapers, books, and more online.
Read more