Risk sharing with Multilateral Financial Institutions in infrastructure and energy project financing : effect on capital relief for commercial banks

(Matsukawa and Habeck, 2007) analyse the main instruments for risk mitigation in infrastructure financing with Multilateral Financial Institutions (MFIs). Their review coincided with the global financial crisis of 2007-08, and is highly relevant in current times considering the sovereign debt crisis, the lack of available capital and the increases in bank regulation in Western economies. The current macroeconomic environment has seen a slowdown in the level of finance for infrastructure projects, as they pose a higher credit risk given their requirements for long term investments. The rationale for this work is to look for innovative solutions that are focused on the credit risk mitigation of infrastructure and energy projects whilst optimizing the economic capital allocation for commercial banks. This objective is achieved through risk-sharing with MFIs and looking for capital relief in project finance transactions. This research finds out the answer to the main question: "What is the impact of risk-sharing with MFIs on project finance transactions to increase their efficiency and viability?", and is developed from the perspective of a commercial bank assessing the economic capital used and analysing the relevant variables for it: Probability of Default, Loss Given Default and Recovery Rates, (Altman, 2010). An overview of project finance for the infrastructure and energy sectors in terms of the volume of transactions worldwide is outlined, along with a summary of risk-sharing financing with MFIs. A review of the current regulatory framework beneath risk-sharing in structured finance with MFIs is also analysed. From here, the impact of risk-sharing and the diversification effect in infrastructure and energy projects is assessed, from the perspective of economic capital allocation for a commercial bank. CreditMetrics (J. P. Morgan, 1997) is applied over an existing well diversified portfolio of project finance infrastructure and energy investments, working with the main risk capital measures: economic capital, RAROC, and EVA. The conclusions of this research show that economic capital allocation on a portfolio of project finance along with risk-sharing with MFIs have a huge impact on capital relief whilst increasing performance profitability for commercial banks. There is an outstanding diversification effect due to the portfolio, which is combined with risk mitigation and an improvement in recovery rates through Partial Credit Guarantees issued by MFIs. A stress test scenario analysis is applied to the current assumptions and credit risk model, considering a downgrade in the rating for the commercial bank (lender) and an increase of default in emerging countries, presenting a direct impact on economic capital, through an increase in expected loss and a decrease in performance profitability. Getting capital relief through risk-sharing makes it more viable for commercial banks to finance infrastructure and energy projects, with the beneficial effect of a direct impact of these investments on GDP growth and employment. The main contribution of this work is to promote a strategic economic capital allocation in infrastructure and energy financing through innovative risk-sharing with MFIs and economic pricing to create economic value added for banks, and to allow the financing of more infrastructure and energy projects. This work suggests several topics for further research in relation to issues analysed. (Matsukawa and Habeck, 2007) analizan los principales instrumentos de mitigación de riesgos en las Instituciones Financieras Multilaterales (IFMs) para la financiación de infraestructuras. Su presentación coincidió con el inicio de la crisis financiera en Agosto de 2007, y sus consecuencias persisten en la actualidad, destacando la deuda soberana en economías desarrolladas y los problemas capitalización de los bancos. Este entorno macroeconómico ha ralentizado la financiación de proyectos de infraestructuras. El actual trabajo de investigación tiene su motivación en la búsqueda de soluciones para la financiación de proyectos de infraestructuras y de energía, mitigando los riesgos inherentes, con el objeto de reducir el consumo de capital económico en los bancos financiadores. Este objetivo se alcanza compartiendo el riesgo de la financiación con IFMs, a través de estructuras de risk-sharing. La investigación responde la pregunta: "Cuál es el impacto de risk-sharing con IFMs, en la financiación de proyectos para aumentar su eficiencia y viabilidad?". El trabajo se desarrolla desde el enfoque de un banco comercial, estimando el consumo de capital económico en la financiación de proyectos y analizando las principales variables del riesgo de crédito, Probability of Default, Loss Given Default and Recovery Rates, (Altman, 2010). La investigación presenta las cifras globales de Project Finance en los sectores de infraestructuras y de energía, y analiza el marco regulatorio internacional en relación al consumo de capital económico en la financiación de proyectos en los que participan IFMs. A continuación, el trabajo modeliza una cartera real, bien diversificada, de Project Finance de infraestructuras y de energía, aplicando la metodología CreditMet- rics (J. P. Morgan, 1997). Su objeto es estimar el consumo de capital económico y la rentabilidad de la cartera de proyectos a través del RAROC y EVA. La modelización permite estimar el efecto diversificación y la liberación de capital económico consecuencia del risk-sharing. Los resultados muestran el enorme impacto del efecto diversificación de la cartera, así como de las garantías parciales de las IFMs que mitigan riesgos, mejoran el recovery rate de los proyectos y reducen el consumo de capital económico para el banco comercial, mientras aumentan la rentabilidad, RAROC, y crean valor económico, EVA. En escenarios económicos de inestabilidad, empeoramiento del rating de los bancos, aumentos de default en los proyectos y de correlación en las carteras, hay un impacto directo en el capital económico y en la pérdida de rentabilidad. La liberación de capital económico, como se plantea en la presente investigación, permitirá financiar más proyectos de infraestructuras y de energía, lo que repercutirá en un mayor crecimiento económico y creación de empleo. La principal contribución de este trabajo es promover la gestión activa del capital económico en la financiación de infraestructuras y de proyectos energéticos, a través de estructuras innovadoras de risk-sharing con IFMs y de creación de valor económico en los bancos comerciales, lo que mejoraría su eficiencia y capitalización. La aportación metodológica del trabajo se convierte por su originalidad en una contribución, que sugiere y facilita nuevas líneas de investigación académica en las principales variables del riesgo de crédito que afectan al capital económico en la financiación de proyectos.

Tutoring and mentoring project for foreign students of forest engineering degrees

We present an innovative educational project dedicated to improve the academic performance of foreign students by enhancing the integration of international students during their academic attendance in the programs offered at Universidad Politécnica de Madrid?s School of Forest Engineering (Spain).

Large-scale assessment of language proficiency: theoretical and pedagogical reflections on the use of multiple-choice tests

The new requirement placed on students in tertiary settings in Spain to demonstrate a B1 or a B2 proficiency level of English, in accordance with the Common European Framework of Reference for Languages (CEFRL), has led most Spanish universities to develop a program of certification or accreditation of the required level. The first part of this paper aims to provide a rationale for the type of test that has been developed at the Universidad Politécnica de Madrid for the accreditation of a B2 level, a multiple choice version, and to describe how it was constructed and validated. Then, in the second part of the paper, the results from its application to 924 students enrolled in different degree courses at a variety of schools and faculties at the university are analyzed based on a final test version item analysis. To conclude, some theoretical as well as practical conclusions about testing grammar that affect the teaching and learning process are drawn. RESUMEN. Las nuevas exigencias sobre niveles de competencia B1 y B2 en inglés según el Marco Común Europeo de Referencia para las Lenguas (MCERL) que se imponen sobre los estudiantes de grado y posgrado han llevado a la mayoría de las universidades españolas a desarrollar programas de acreditación o de certificación de estos niveles. La primera parte de este trabajo trata sobre las razones que fundamentan la elección de un tipo concreto de examen para la acreditación del nivel B2 de lengua inglesa en la Universidad Politécnica de Madrid. Se trata de un test de opción múltiple y en esta parte del trabajo se describe cómo fue diseñado y validado. En la segunda parte, se analizan los resultados de la aplicación del test a gran escala a un total de 924 estudiantes matriculados en varias escuelas y Facultades de la Universidad. Para terminar, se apuntan una serie de conclusiones teóricas y prácticas sobre la evaluación de la gramática y de qué modo influye en los procesos de enseñanza y aprendizaje.

Strengthening and measuring project management competences of engineering students

Since 2010 the Industrial Engineering School at Universidad Politécnica de Madrid (ETSII UPM) has its Plan Study accredited by ABET. Since then a big motivation has been promoted from the management team encouraging teachers to work on the measurement and strengthening of student¿s competences. Generic skills or behavior acquired significant importance in the workplace, particularly in relation to project management. Because of this, and framed within the requirements of the European Higher Education Area (EHEA), the curriculum of the new degrees are being developed under the competence-based learning. This situation leads to the need to have a clear measurement tool skills as a basis for developing them within the curriculum. A group of multidisciplinary teachers have been working together during two years to design measuring instruments valid for engineering students.

Training project management complexity in postgraduate and continuing education programs: a learning strategy in the eshe (European Space of Higher Education) framework

The objective of this paper is to address the methodological process of a teaching strategy for training project management complexity in postgraduate programs. The proposal is made up of different methods —intuitive, comparative, deductive, case study, problem-solving Project-Based Learning— and different activities inside and outside the classroom. This integration of methods motivated the current use of the concept of “learning strategy”. The strategy has two phases: firstly, the integration of the competences —technical, behavioral and contextual—in real projects; and secondly, the learning activity was oriented in upper level of knowledge, the evaluating the complexity for projects management in real situations. Both the competences in the learning strategy and the Project Complexity Evaluation are based on the ICB of IPMA. The learning strategy is applied in an international Postgraduate Program —Erasmus Mundus Master of Science— with the participation of five Universities of the European Union. This master program is fruit of a cooperative experience from one Educative Innovation Group of the UPM -GIE-Project-, two Research Groups of the UPM and the collaboration with other external agents to the university. Some reflections on the experience and the main success factors in the learning strategy were presented in the paper

Training project management complexity in postgraduate and continuing education programs: a learning strategy in the eshe (European Space of Higher Education) framework

The objective of this paper is to address the methodological process of a teaching strategy for training project management complexity in postgraduate programs. The proposal is made up of different methods —intuitive, comparative, deductive, case study, problem-solving Project-Based Learning— and different activities inside and outside the classroom. This integration of methods motivated the current use of the concept of ―learning strategy‖. The strategy has two phases: firstly, the integration of the competences —technical, behavioral and contextual—in real projects; and secondly, the learning activity was oriented in upper level of knowledge, the evaluating the complexity for projects management in real situations. Both the competences in the learning strategy and the Project Complexity Evaluation are based on the ICB of IPMA. The learning strategy is applied in an international Postgraduate Program —Erasmus Mundus Master of Science— with the participation of five Universities of the European Union. This master program is fruit of a cooperative experience from one Educative Innovation Group of the UPM -GIE-Project-, two Research Groups of the UPM and the collaboration with other external agents to the university. Some reflections on the experience and the main success factors in the learning strategy were presented in the paper.

Infrastructure Finance in Developing Countries by State and Multilateral Development Banks

Infrastructure concession is an alternative widely used by governments to increase investment. In the case of the road sector, the main characteristics of the concessions are: long-term projects, high investments in the early years of the contract and high risks. A viability analysis must be carried out for each concession and consider the characteristics of the project. When the infrastructure is located in a developing country, political and market growth uncertainties should be add in the concession project analysis, as well as economic instability, because they present greater risks. This paper is an analysis of state bank participation in road infrastructure finance in developing countries. For this purpose, we studied road infrastructure financing and its associated risks, and also the features of developing countries. Furthermore, we considered the issue of state banks and multilateral development banks that perform an important role by offering better credit lines than the private banks, in terms of cost, interest and grace period. Based on this study, we analyzed the Brazilian Development Bank - BNDES – and their credit supply to road infrastructure concessions. The results show that BNDES is the main financing agent for long-term investment in the sector, offering loans with low interest rates in Brazilian currency. From this research we argue that a single state bank should not alone support the increasing demand for finance in Brazil. Therefore, we conclude that there is a need to expand the supply of credit in Brazil, by strengthening private banks in the long-term lending market.

Educar en valores a través de programas de deporte escolar: un estudio comparado entre la “Union Nationale du Sport Scolaire” (Francia) y los “Campeonatos Escolares en los IES de la Comunidad de Madrid” (España)

El interés de las administraciones públicas por promover el deporte escolar, suele justificarse por los beneficios educativos y saludables que los escolares obtendrían de las prácticas físico-deportivas. Mas allá de concepciones neutrales o excesivamente idealizadas sobre su valor educativo, las condiciones socioculturales que lo configuran y las intervenciones pedagógicas en el terreno marcan la orientación de la educación en valores propuesta en los programas de deporte escolar. El objeto de estudio de esta tesis doctoral es comprender la educación en valores desde el punto de vista de la estructura organizativa y de los actores implicados en dos programas de deporte escolar seleccionados de países diferentes: la “Union Nationale du Sport Scolaire” (UNSS) en Francia y los “Campeonatos Escolares en los IES de la Comunidad de Madrid” (CEIESCM) en España. El diseño metodológico es un estudio comparado internacional y de corte cualitativo, donde se han analizado 66 entrevistas semiestructuradas, 28 observaciones directas, 45 documentos y el cuaderno etnográfico del investigador por medio de análisis de contenido temático apoyado con el programa NVivo 10. Los resultados aportan dos concepciones distintas de deporte escolar con repercusión en la educación en valores: la UNSS complementa valores del sistema educativo y deportivo proporcionando cauces de implicación y compromiso del alumnado en el arbitraje y la organización asociativa, mientras que en CEIESCM, eximiéndoles de esas responsabilidades, se prioriza la máxima práctica de actividad físico-deportiva reforzando o sancionando durante la misma las conductas que vayan a promover valores del juego limpio propios del deporte. La explicación de estos resultados, contextualizados en sus países respectivos, permite proyectar un eventual deporte escolar europeo basado en valores ciudadanos y democráticos que recogería la perspectiva moral, jurídica y política propuesta a partir del estudio. RÉSUMÉ L’intérêt des administrations publiques pour promouvoir le sport scolaire est souvent justifié par les bénéfices éducatifs et ceux liés à la santé que les élèves obtiendraient des pratiques physiques et sportives. Au-delà des conceptions neutres et excessivement idéalistes sur sa valeur éducative, les conditions socio-culturelles qui le configurent et les interventions pédagogiques sur le terrain marquent l’orientation de l’éducation des valeurs proposée par les programmes de sport scolaire. L’objet de cette étude est de comprendre l’éducation des valeurs du point de vue de la structure organisationnelle et des acteurs impliqués dans deux programmes de sport scolaire sélectionnés de différents pays: l’« Union Nationale du Sport Scolaire » (UNSS) en France et les « Campeonatos Escolares de los IES de la Comunidad de Madrid » (CEIESCM) en Espagne. L’approche méthodologique est une étude comparée internationale et qualitative, où l’on a analysé 66 entretiens semi-directifs, 28 observations directes, 45 documents et le carnet ethnographique du chercheur par le biais d’une analyse de contenu thématique à l’aide du programme NVivo 10. Les résultats apportent deux conceptions différentes du sport scolaire qui ont des répercussions dans l’éducation des valeurs: l’UNSS regroupe les valeurs du système éducatif et sportif en proposant aux élèves des espaces d’implication et d’engagement avec l’arbitrage et l’organisation associative, alors que les CEISCM, les exemptent de ces responsabilités et donnent la priorité au maximum d’activité physique et sportive pratiquée où l’on renforce ou sanctionne pendant son déroulement les conduites qui encourageront les valeurs de fair-play liées au sport. L’explication des résultats, contextualisée dans leurs pays respectifs, permet de projeter un éventuel sport scolaire européen basé sur des valeurs citoyennes et démocratiques qui recueillerait la perspective morale, juridique et politique proposée suite à cette étude. ABSTRACT The interest of public institutions for promoting school sports is often justified by the educational and healthy benefits that the students obtained through physical activity and sports practice. Beyond neutral or overly idealised conceptions about the educational value of sport, sociocultural conditions and pedagogical interventions shape the orientation of education in values given in school sports programs. The aim of this thesis is to understand the values education from the perspectives of the organizational structure and actors involved in two school sports programs selected from different countries: the "Union Nationale du Sport Scolaire" (UNSS) in France and the "School Championships in the IES of the Community of Madrid" (CEIESCM) in Spain. The methodology is a comparative international and qualitative study, with 66 semistructured interviews, 28 direct observations, 45 documentary resources and the ethnographic research notebook being analysed through thematic content analysis using the program NVivo 10. The results provide two different conceptions of school sport that impact on values education: on the one hand, the UNSS complements values of the educational and sports system providing channels of participation and promoting the involvement of students in refereeing and associative organization; on the other hand, CEIESCM is does not assume these responsibilities and the maximum sportive practice is prioritized reinforcing or punishing behaviours that promote sport fair play. The explanation of these results, contextualized in their respective countries, can project an eventual European school sport based on citizens and democratic values and reflect moral, legal and political perspective proposed in this study.