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.

Quantity of CO2 Emissions in the Life Cycle of a Highway Infrastructure

There is strong evidence to indicate that carbon dioxide and other greenhouse gases are accumulating at unprecedented concentrations in out atmosphere contributing to global climate change. Evidence is equally strong that human activities, mainly the burning of fossil fuels, are driving force in this process (IPCC 2007). While different industries contribute varying amounts to total anthropogenic greenhouse gases, it is incumbent upon each to understand its contribution and search for sensible ways to reduce overall greenhouse gas production. The aim of this paper is the development of a methodology to determine the amount of CO2 emissions of a highway, allowing providing solutions that can improve the energy footprint and reduce its emissions

The new cloud computing paradigm: the way to IT seen as a utility

In the present competitive environment, companies are wondering how to reduce their IT costs while increasing their efficiency and agility to react when changes in the business processes are required. Cloud Computing is the latest paradigm to optimize the use of IT resources considering ?everything as a service? and receiving these services from the Cloud (Internet) instead of owning and managing hardware and software assets. The benefits from the model are clear. However, there are also concerns and issues to be solved before Cloud Computing spreads across the different industries. This model will allow a pay-per-use model for the IT services and many benefits like cost savings, agility to react when business demands changes and simplicity because there will not be any infrastructure to operate and administrate. It will be comparable to the well known utilities like electricity, water or gas companies. However, this paper underlines several risk factors of the model. Leading technology companies should research on solutions to minimize the risks described in this article. Keywords - Cloud Computing, Utility Computing, Elastic Computing, Enterprise Agility

Renewable energy infrastructure. A challenge for Venezuelan industrial construction

The relevance of renewable energy has grown significantly in our global society. Important efforts are oriented to sustain it. Renewable energy depends on different technical, financial environmental and social complex processes. From the point of view of industrial construction sector this research evaluates some of the current trends in energy generation and use in Venezuela as well as environmental consequences and risks that derive from these. Additionally, authors highlight the importance of infrastructure as key issue to sustain renewable energy generation and use. The study present references of some energy renewable projects in process in Venezuela and the main problems that constrain their performance. Conclusions evidence the complex nature of industrial construction and suggest the need to improve industrial construction competitivenes as a strategy oriented to enhance renewable energy offer in the country. Additionally it is proposed to all stakeholders to work toghether to correct the conditions that currently limit industrial construction development. This is part of ongoing research.

Enhancing K-12 science education through a multi-device web tool to facilitate content integration and e-infrastructure access

An effective K-12 science education is essential to succeed in future phases of the curriculum and the e-Infrastructures for education provide new opportunities to enhance it. This paper presents ViSH Viewer, an innovative web tool to consume educational content which aims to facilitate e-Science infrastructures access through a next generation learning object called "Virtual Excursion". Virtual Excursions provide a new way to explore science in class by taking advantage of e-Infrastructure resources and their integration with other educational contents, resulting in the creation of a reusable, interoperable and granular learning object. In order to better understand how this tool can allow teachers and students a joyful exploration of e-Science, we also present three Virtual Excursion examples. Details about the design, development and the tool itself are explained in this paper as well as the concept, structure and metadata of the new learning object.

Quantity of CO2 Emissions in the Life Cycle of a Highway Infrastructure.

The complexity of climate change and its evolution during the last few years has a positive impact on new developments and approaches to reduce the emissions of CO2. Looking for a methodology to evaluate the sustainability of a roadway, a tool has been developed. Life Cycle Assessment (LCA) is being accepted by the road industry to measure and evaluate the environmental impacts of an infrastructure, as the energy consumption and carbon footprint. This paper describes the methodology to calculate the CO2 emissions associated with the energy embodied on a roadway along its life cycle, including construction, operations and demolition. It will assist to find solutions to improve the energy footprint and reduce the amount of CO2 emissions. Details are provided of both, the methodology and the data acquisition. This paper is an application of the methodology to the Spanish highways, using a local database. Two case studies and a practical example are studied to show the model as a decision support for sustainable construction in the road industry.

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.

Self-Learning Embedded System for Object Identification in Intelligent Infrastructure Sensors

The emergence of new horizons in the field of travel assistant management leads to the development of cutting-edge systems focused on improving the existing ones. Moreover, new opportunities are being also presented since systems trend to be more reliable and autonomous. In this paper, a self-learning embedded system for object identification based on adaptive-cooperative dynamic approaches is presented for intelligent sensor’s infrastructures. The proposed system is able to detect and identify moving objects using a dynamic decision tree. Consequently, it combines machine learning algorithms and cooperative strategies in order to make the system more adaptive to changing environments. Therefore, the proposed system may be very useful for many applications like shadow tolls since several types of vehicles may be distinguished, parking optimization systems, improved traffic conditions systems, etc.

Prospects and challenges of a Pan-European post-trade infrastructure. ECMI Policy Brief No. 20, 8 November 2012

After more than a decade of indecision, the EU is finally now set to implement a consistent regulatory architecture for clearing and settlement. Following the agreement on a European market infrastructure Regulation (EMIR), the European Commission has proposed harmonised rules for centralised settlement depositaries (CSDs), while the European Central Bank is moving forward with its plans for a central eurozone settlement engine. This paper analyses three components of the new post-trade infrastructure measures: 1) the regulatory framework for and supervision of central counterparties under the new EMIR legislation, 2) the authorisation requirements of trade repositories and 3) the draft CSD Regulation and the progress with the ECB’s Target 2 Securities project. It then discusses the impact of the new rules, and argues that, analogous to the unexpected impact of MiFID on trading infrastructures, a similar EMIR revolution may be on its way.

What prospects for transport infrastructure and impacts on growth in southern and eastern Mediterranean countries? MEDPRO Report No. 3, February 2013

Lack of adequate infrastructure is a significant inhibitor to increased trade of the countries of the Mediterranean region. Bringing their transport infrastructure to standards comparable with countries of a similar per capita GDP will be costly but worthwhile. We compare the current quantities of six types of transport infrastructure with international benchmarks, and estimate the additional quantities needed to reach the benchmarks. We also estimate the cost of that infrastructure and express it as a percentage of GDP. Finally we make tentative estimates of how much trade might be generated and how this might impact on GDP. All the estimates are made for 11 southern and eastern Mediterranean countries (SEMCs) under four scenarios. The greatest need for additional infrastructure is for airport passenger terminals (between 52% and 56%), whereas the least is for more unpaved roads (between 7% and 13%). The investment (including maintenance) cost would be between 0.9% of GDP and 2.4% of GDP, although the investments in some countries would be between 1.4% and 4.5% of GDP. The impact on non-oil international trade would be substantial, but with differences between imports and exports. The overall trade balance of the 11 countries would be an improvement of between 5.4% and 17.2%, although some countries would continue to have a negative balance. A final assessment is made of the benefit ratio between the increase in GDP and the cost of transport investment. This varies between about 3 and 8, an indication of the high return to be expected from increased investment in transport infrastructure.

The Asian Infrastructure Investment Bank (AIIB): China’s new multilateralism and the erosion of the West. Security Policy Brief No. 63, April 2015

China will launch a new development bank for Asia later this year, called the AIIB. 58 countries worldwide have already applied to become founding members, including numerous Western nations. This policy brief argues that the AIIB constitutes an important international development, as it reflects a new geopolitical reality and marks a new turn in China’s practice of multilateralism. It also looks critically at the European uncoordinated response to the AIIB, and what it tells about Europe’s shrinking role in the world.

State Aid to Infrastructure: Do Competitively Selected Operators Obtain an Undue Advantage? Bruges European Economic Research Papers (BEER) 33/2015

Addressing high and volatile natural resource prices, uncertain supply prospects, reindustrialization attempts and environmental damages related to resource use, resource efficiency has evolved into a highly debated proposal among academia, policy makers, firms and international financial institutions (IFIs). In 2011, the European Union (EU) declared resource efficiency as one of its seven flagship initiatives in its Europe 2020 strategy. This paper contributes to the discussions by assessing its key initiative, the Roadmap to a Resource Efficient Europe (EC 2011 571), following two streams of evaluation. In a first step, resource efficiency is linked to two theoretical frameworks regarding sustainability, (i) the sustainability triangle (consisting of economic, social and ecological dimensions) and (ii) balanced sustainability (combining weak and strong sustainability). Subsequently, both sustainability frameworks are used to assess to which degree the Roadmap follows the concept of sustainability. It can be concluded that it partially respects the sustainability triangle as well as balanced sustainability, primarily lacking a social dimension. In a second step, following Steger and Bleischwitz (2009), the impact of resource efficiency on competitiveness as advocated in the Roadmap is empirically evaluated. Using an Arellano–Bond dynamic panel data model reveals no robust impact of resource efficiency on competiveness in the EU between 2004 and 2009 – a puzzling result. Further empirical research and enhanced data availability are needed to better understand the impacts of resource efficiency on competitiveness on the macroeconomic, microeconomic and industry level. In that regard, strengthening the methodologies of resource indicators seem essential. Last but certainly not least, political will is required to achieve the transition of the EU-economy into a resource efficient future.

Bicycle Touring Infrastructure: An Architectural Proposal for Sustainable Bicycle Tourism

Thesis (Master's)--University of Washington, 2016-06

GIS-Based Suitability Analysis and Planning of Green Infrastructure: A Case of the PPCOD, Capitol Hill

Thesis (Master's)--University of Washington, 2016-06

The changing public-private infrastructure mix: Economy-wide implications

This article provides an economy-wide perspective on the changing role of the public sector in developing economic and social infrastructure in Australia. It analyses the scale and macroeconomic significance of the key economic and social infrastructure sectors - communication services, electricity, gas and water supply, transport, education, health and community services, government administration and defence. It then canvasses the major policy issues that have arisen in the progression from public to private infrastructure provision and considers why concerns about the trend fall in traditional public works spending may be misplaced in light of recent economic and institutional changes.