Demand for Political Risk Insurance Soars as Lending Criteria
Tightens
SINGAPORE, Jan. 8, 2013
/PRNewswire/—Political and sovereign risks have become a major
stumbling block to getting infrastructure financing secured, as
nationalisation, expropriation and currency inconvertibility become
top concerns for lenders, according to Marsh’s latest Asia
Directors’ Series.
According to the report, infrastructure investment in Asia is
stalling as the appetite for project finance from European banks
diminishes and political and sovereign risk concerns increase,
creating a new landscape for project sponsors to navigate.
The dislocation between infrastructure demand in Asia and
funding challenges from commercial banks has created an opportunity
for a number of government backed development, export-import and
multilateral financial institutions to take a lead financing role
rather than simply a loan syndicate participant or guarantor.
“The demand for infrastructure development in Asia is getting
greater by the day, as the need for power generation,
transportation and other basic functions continues to grow
consistent with the region’s economic growth,” said Jason Wells,
Managing Director and Marsh’s Specialty Leader for Asia. “As
European banks continue to reduce their long-term lending
activities, project sponsors have been forced to adapt their
engagement approach to access funding from development banks, which
have different lending criteria to commercial banks.”
“In addition to the shifting lending landscape, infrastructure
project sponsors are going to greater lengths to demonstrate they
are insured for political risks and sovereign non-payment risks to
demonstrate project bankability and get these deals over the
line.”
To download the report, please click here.
About Marsh
Marsh, a global leader in insurance broking and risk management,
teams with its clients to define, design, and deliver innovative
industry-specific solutions that help them protect their future and
thrive. It has approximately 26,000 colleagues who collaborate to
provide advice and transactional capabilities to clients in over
100 countries. Marsh is a wholly owned subsidiary of Marsh &
McLennan Companies (NYSE: MMC), a global team
of professional services companies offering clients advice and
solutions in the areas of risk, strategy, and human capital. With
over 53,000 employees worldwide and annual revenue exceeding US$11
billion, Marsh & McLennan Companies is also the parent company
of Guy Carpenter, a global leader in providing risk and reinsurance
intermediary services; Mercer, a global leader in talent, health,
retirement, and investment consulting; and Oliver Wyman, a global
leader in management consulting.
Follow Marsh on Twitter @Marsh_Inc.