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.

Floating car data augmentation based on infrastructure sensors and neural networks

The development of new-generation intelligent vehicle technologies will lead to a better level of road safety and CO2 emission reductions. However, the weak point of all these systems is their need for comprehensive and reliable data. For traffic data acquisition, two sources are currently available: 1) infrastructure sensors and 2) floating vehicles. The former consists of a set of fixed point detectors installed in the roads, and the latter consists of the use of mobile probe vehicles as mobile sensors. However, both systems still have some deficiencies. The infrastructure sensors retrieve information fromstatic points of the road, which are spaced, in some cases, kilometers apart. This means that the picture of the actual traffic situation is not a real one. This deficiency is corrected by floating cars, which retrieve dynamic information on the traffic situation. Unfortunately, the number of floating data vehicles currently available is too small and insufficient to give a complete picture of the road traffic. In this paper, we present a floating car data (FCD) augmentation system that combines information fromfloating data vehicles and infrastructure sensors, and that, by using neural networks, is capable of incrementing the amount of FCD with virtual information. This system has been implemented and tested on actual roads, and the results show little difference between the data supplied by the floating vehicles and the virtual vehicles.

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.

A Monitoring Infrastructure for FPGA Self-Awareness and Dynamic Adaptation

Variabilities associated with CMOS evolution affect the yield and performance of current digital designs. FPGAs, which are widely used for fast prototyping and implementation of digital circuits, also suffer from these issues. Proactive approaches start to appear to achieve self-awareness and dynamic adaptation of these devices. To support these techniques we propose the employment of a multi-purpose sensor network. This infrastructure, through adequate use of configuration and automation tools, is able to obtain relevant data along the life cycle of an FPGA. This is realised at a very reduced cost, not only in terms of area or other limited resources, but also regarding the design effort required to define and deploy the measuring infrastructure. Our proposal has been validated by measuring inter-die and intra-die variability in different FPGA families.

Time and space partition platform for safe and secure flight software.

There are a number of research and development activities that are exploring Time and Space Partition (TSP) to implement safe and secure flight software. This approach allows to execute different real-time applications with different levels of criticality in the same computer board. In order to do that, flight applications must be isolated from each other in the temporal and spatial domains. This paper presents the first results of a partitioning platform based on the Open Ravenscar Kernel (ORK+) and the XtratuM hypervisor. ORK+ is a small, reliable real-time kernel supporting the Ada Ravenscar Computational model that is central to the ASSERT development process. XtratuM supports multiple virtual machines, i.e. partitions, on a single computer and is being used in the Integrated Modular Avionics for Space study. ORK+ executes in an XtratuM partition enabling Ada applications to share the computer board with other applications.

A scalable SIEM correlation engine and its application to the Olympic Games IT infrastructure

The security event correlation scalability has become a major concern for security analysts and IT administrators when considering complex IT infrastructures that need to handle gargantuan amounts of events or wide correlation window spans. The current correlation capabilities of Security Information and Event Management (SIEM), based on a single node in centralized servers, have proved to be insufficient to process large event streams. This paper introduces a step forward in the current state of the art to address the aforementioned problems. The proposed model takes into account the two main aspects of this ?eld: distributed correlation and query parallelization. We present a case study of a multiple-step attack on the Olympic Games IT infrastructure to illustrate the applicability of our approach.

Secure optical networks based on quantum key distribution and weakly trusted repeaters

Abstract—In this paper we explore how recent technologies can improve the security of optical networks. In particular, we study how to use quantum key distribution(QKD) in common optical network infrastructures and propose a method to overcome its distance limitations. QKD is the first technology offering information theoretic secretkey distribution that relies only on the fundamental principles of quantum physics. Point-to-point QKDdevices have reached a mature industrial state; however, these devices are severely limited in distance, since signals at the quantum level (e.g., single photons) are highly affected by the losses in the communication channel and intermediate devices. To overcome this limitation, intermediate nodes (i.e., repeaters) are used. Both quantum-regime and trusted, classical repeaters have been proposed in the QKD literature, but only the latter can be implemented in practice. As a novelty, we propose here a new QKD network model based on the use of not fully trusted intermediate nodes, referred to as weakly trusted repeaters. This approach forces the attacker to simultaneously break several paths to get access to the exchanged key, thus improving significantly the security of the network. We formalize the model using network codes and provide real scenarios that allow users to exchange secure keys over metropolitan optical networks using only passive components. Moreover, the theoretical framework allows one to extend these scenarios not only to accommodate more complex trust constraints, but also to consider robustness and resiliency constraints on the network.

Definition of a support infrastructure for replicating and aggregating families of software engineering experiments

Experimental software engineering includes several processes, the most representative being run experiments, run replications and synthesize the results of multiple replications. Of these processes, only the first is relatively well established in software engineering. Problems of information management and communication among researchers are one of the obstacles to progress in the replication and synthesis processes. Software engineering experimentation has expanded considerably over the last few years. This has brought with it the invention of experimental process support proposals. However, few of these proposals provide integral support, including replication and synthesis processes. Most of the proposals focus on experiment execution. This paper proposes an infrastructure providing integral support for the experimental research process, specializing in the replication and synthesis of a family of experiments. The research has been divided into stages or phases, whose transition milestones are marked by the attainment of their goals. Each goal exactly matches an artifact or product. Within each stage, we will adopt cycles of successive approximations (generateand- test cycles), where each approximation includes a diferent viewpoint or input. Each cycle will end with the product approval.

The role of private sector in development: The relation between public-private investment in infrastructure and agricultural exports in developing countries

Increasing foreign private investment in developing countries explains why the Public-Private Investment (PPI) is becoming a key tool to reach the development goal. This article analyzes the relation between PPI in infrastructure and agricultural exports in developing countries. We use the panel data approach (52 countries and 17 years). Results show that PPI in infrastructure has a positive impact on agricultural exports of developing countries. The impact is greater in developing countries with higher income rates. This suggests that the lower income countries require the intervention of public sector without which private investment cannot help to economic development.

Ribonucleoprotein infrastructure regulating the flow of genetic information between the genome and the proteome

Following transcription and splicing, each mRNA of a mammalian cell passes into the cytoplasm where its fate is in the hands of a complex network of ribonucleoproteins (mRNPs). The success or failure of a gene to be expressed depends on the performance of this mRNP infrastructure. The entry, gating, processing, and transit of each mRNA through an mRNP network helps determine the composition of a cell's proteome. The machinery that regulates storage, turnover, and translational activation of mRNAs is not well understood, in part, because of the heterogeneous nature of mRNPs. Recently, subsets of cellular mRNAs clustered as members of mRNP complexes have been identified by using antibodies reactive with RNA-binding proteins, including ELAV/Hu, eIF-4E, and poly(A)-binding proteins. Cytoplasmic ELAV/Hu proteins are involved in the stability and translation of early response gene (ERG) transcripts and are expressed predominately in neurons. mRNAs recovered from ELAV/Hu mRNP complexes were found to have similar sequence elements, suggesting a common structural linkage among them. This approach opens the possibility of identifying transcripts physically clustered in vivo that may have similar fates or functions. Moreover, the proteins encoded by physically organized mRNAs may participate in the same biological process or structural outcome, not unlike operons and their polycistronic mRNAs do in prokaryotic organisms. Our goal is to understand the organization and flow of genetic information on an integrative systems level by analyzing the collective properties of proteins and mRNAs associated with mRNPs in vivo.

When Wells Run Dry: Water and Tourism Along the Western Coast of Nicaragua

This dissertation uses a political ecology approach to examine the relationship between tourism development and groundwater in southwest Nicaragua. Tourism in Nicaragua is a booming industry bolstered by ‘unspoiled’ natural beauty, low crime rates, and government incentives. This growth has led to increased infrastructure, revenue, and employment opportunities for many local communities along the Pacific coast. Not surprisingly, it has also brought concomitant issues of deeper poverty, widening gaps between rich and poor, and competition over natural resources. Adequate provisions of freshwater are necessary to sustain the production and reproduction of tourism; however, it remains uncertain if groundwater supplies can keep pace with demand. The objective of this research is to assess water supply availability amidst tourism development in the Playa Gigante area. It addresses the questions: 1) are local groundwater supplies sufficient to sustain the demand for freshwater imposed by increased tourism development? and 2) is there a power relationship between tourism development and control over local freshwater that would prove inequitable to local populations? Integrating the findings of groundwater monitoring, geological mapping, and ethnographic and survey research from a representative stretch of Pacific coastline, this dissertation shows that diminishing recharge and increased groundwater consumption is creating conflict between stakeholders with various levels of knowledge, power, and access. Although national laws are structured to protect the environment and ensure equitable access to groundwater, the current scramble to secure water has powerful implications on social relations and power structures associated with tourism development. This dissertation concludes that marginalization due to environmental degradation is attributable to the nexus of a political promotion of tourism, poorly enforced state water policies, insufficient water research, and climate change. Greater technical attention to hydrological dynamics and collaboration amongst stakeholders are necessary for equitable access to groundwater, environmental sustainability, and profitability of tourism.

A viability analysis of a secure VoIP and instant messaging system on a Pocket PC platform

We propose a secure full-duplex VoIP and instant messaging system on a Pocket PC platform, allowing for session key transport using a public-key protocol and encrypted text or voice communication using a private-key algorithm. The full-duplex VoIP scheme presents good performance for long duration communication over LAN networks.

Flora historica : or, The three seasons of the British parterre historically and botanically treated : with observations on planting, to secure a regular succession of flowers from the commencement of spring to the end of autumn /

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