Zeszyty Naukowe Uniwersytetu Szczecińskiego. Problemy Transportu i Logistyki

Currently: Problemy Transportu i Logistyki

ISSN: 1644-275X     eISSN: 2353-3005    OAI    DOI: 10.18276/ptl.2015.30-04
CC BY-SA   Open Access 

Issue archive / ZN nr 871 PTiL nr 30

Authors: Kamil Liberadzki
Zakład Finansów Przedsiębiorstwa, Instytut Finansów, Kolegium Zarządzania i Finansów, Szkoła Główna Handlowa w Warszawie

Marcin Liberadzki
Zakład Finansów Przedsiębiorstwa, Instytut Finansów, Kolegium Zarządzania i Finansów, Szkoła Główna Handlowa w Warszawie
Keywords: Project bonds public-private partnerships infrastructure financing European Investment Bank credit enhancement
Year of publication:2015
Page range:12 (47-58)
Cited-by (Crossref) ?:


Private sector financing of transport infrastructure in Europe still falls behind pre-crisis levels. Budgetary constraints in the public sector for infrastructure financing together with banks unable to deliver the volume of debt needed for infrastructure financing create need for alternative sources of funding from capital markets. Infrastructure financing is mostly debt financing. Use of high leverage (project financing) explains the investment characteristics of the infrastructure. The aim of the European Commission’s 2020 Project Bond Initiative (PBI) is to encourage investments in infrastructure projects by institutional investors. Bond financings for public private partnership (PPP) projects and other project financings for infrastructure in Europe effectively ended with the demise of several monolines in the early stages of the credit crunch. The PBI is designed to facilitate institutional investor appetite for projects by offering credit enhancement from the EIB, and with the EIB acting as controlling creditor. The initiative proposes two forms of credit enhancement: a fully-funded subordinate tranche equal to up to 20% of the senior debt and a guarantee of senior debt of up to 20%. Subordinated debt tranche by the European Investment Bank (EIB) provides cushion for senior debt service. PBI helps support standardization and widening of investor market. In addition to competitive pricing, EIB also adds value given its reputation and track record in screening, mitigating and monitoring project risk.  As Basel III bites – the first wave of bank compliance is set for 2015, with fullcompliance due in 2018 – the cost of long-term bank debt should make bond solutions comparatively affordable. As project infrastructure is a specialized asset class and new to many investors, PBI has a vital role to play in supporting institutional investment. The A11 motorway project in Belgium, Spain’s Castor energy storage plant and the UK’s Greater Gabbard offshore transmission link are three projects to receive credit enhancement under the pilot phase of the EIB’s 2020 scheme.
Download file

Article file


1.Agreement – but little clarity – on EU-EIB project bond pilot, Project Finance & Infrastructure Finance 2012.
2.Cholewa, A., Liberadzki, K., Liberadzki, M., Piech, K., Pieregud, J., How to finance effectively the development of transport infrastructure in Poland in the financial perspective 2014–2020, House of Solutions International, Warsaw 2013.
3.EIB cracks project bond conundrum with Castor deal, Euroweek. 7/30/2013, Issue 1315.
4.EU plan builds on TEN-T revisions, “Railway Gazette International” 2011, Vol. 167 Issue 11.
5.Fisher, G., Babbar, S., Private Financing of Toll Roads, RMC Discussion Paper Series 117.
6.Myles, D., A11 proves governments will back project bonds, “International financial Law Review” 2014, Vol. 33, Issue 6.
7.Smith, P., Engineering the EIB bond guarantee, Project Finance & Infrastructure Finance 2011.
8.A pilot for the Europe 2020 Project Bond Initiative, Brussels, COM (2011) 660.
9.Europe 2020 – A strategy for smart, sustainable and inclusive growth, Brussels, COM (2010) 2020 final.
10.Interim report on the pilot phase of the Europe 2020 Project Bond Initiative, Brussels, COM (2013) 929.
11.Project Bond pilot phase, EP – TRAN Committee, 18 March 2014.
12.Regulation No. 670/2012 of the European Parliament and of the Council of 11 July 2012 amending Decision No 1639/2006/EC establishing a Competitiveness and Innovation Framework Programme (2007–2013), OJ L 204/1, 31/07/2012.