The Handbook of Municipal Bonds

CHAPTER 10

Subnational Infrastructure Finance in the Emerging Markets: A Financial Guaranty Perspective

Thomas H. Cochran CivilCredit Advisors LLC

 

Anthony Pellegrini Centennial Group

 

David Stevens

 

Richard Torkelson JPMorgan Securities

 

David White

 

 

 

The closely related fields of public project finance and subnational infrastructure finance are developing rapidly in the world’s emerging market economies for a variety of reasons beyond the rapidly increasing demand for infrastructure driven by high population and GDP growth rates. Two other key drivers of this phenomenon are:

1. The rapid growth and improving quality of local credit and capital markets in the developing world as local contractual savings pools are formed and grow at often explosive rates, and as economic and financial institution reforms stabilize local economies.

2. The “devolution revolution” which is pushing responsibility for infrastructure finance down from central governments to lower levels of government in many countries of Latin America, Central and Eastern Europe, Africa, and Asia. Even in countries such as Chile which have chosen to stay quite centralized governmentally, responsibility for infrastructure finance has been shifted outward to private sector partners through various public-private partnership arrangements such as concessions.

The authors also wish to gratefully acknowledge the contributions of Roger McDaniel.

The purpose of this chapter is to convey the basic approach being taken by monoline ...