Technical Note
INFRASTRUCTURE PROJECT BONDS
INDUSTRY :-
AREA :FINANCE
ORGANIZATION :-
LENGTH :16
LUMS No :02-612-2016-2
PUBLICATION YEAR : 2016
ABSTRACT:
Infrastructure assets are inherently different from other assets because infrastructure projects are often complex, require large number of parties and usually involve market failures. Since, infrastructure projects involve a long-term commitment due to high gestation period, an ideal stream of financing should match these characteristics. Currently, a great deal of infrastructure finance comes from banks that usually hold short-term liabilities and are not well-placed to hold long-term assets on their balance sheets for a long time. In this regard, infrastructure bonds would make suitable instruments to achieve infrastructure financing as both the sources and uses of funds perfectly match their gestation/maturities. This note intends to explore the opportunities and challenges presented by infrastructure bonds as a source of financing infrastructure development.