Best Banks in Project Finance 2004
Platt, Gordon, Global Finance
WORLD'S BEST PROJECT FINANCE BANKS
Global Finance selects the winners from among the leading banks that create and implement financing plans for major projects around the world.
Privale finance initiatives, or PFIs, in Europe, big petrochemical plants in Asia and power- sector restructurings in the United States are contributing to a sharp rise in project finance activity worldwide. The volume of project financing rose 19% in the first nine months of 2004 compared with the same period last year, according to Dealogic ProjectWare, a global database covering nonand limited-recourse debt facilities provided by commercial banks.
"We apply a strict definition to project finance," saysVander Caceres, a London-based analyst at Dealogic. "The bonds and loans that finance a project must be secured solely by the project's assets and cash flow."
Project finance will play an increasingly important role in large energy projects and in the many government privatization plans expected to be announced in the next three to five years, says Steven S. Greenwald, a managing director of Credit Suisse First Boston and senior member of the bank's energy and project finance group.
Global Finance selected CSFB as the Best Global Bank in Project Finance in 2004, based on advisory work and financing for projects completed in the 12 months ended in June.
Greenwald attributes the bank's success in the field large-ly to its ability to provide totally unbiased advice to its clients. "We have access to all relevant markets: the bank market, bond markets, the term-loan B market and all of the bilateral and multilateral lending agencies," he says. "Further, we have shown a willingness to use our own balance sheet to finance highly structured project transactions," he adds. B loans are provided by commercial banks to supplement the A loans provided by development banks to fund a project.
Christopher Hasty, managing director and global head of infrastructure and energy finance at Citigroup's structured corporate finance division in London, says record-high oil prices and a greater focus on protecting the environment are the main forces shaping projects in the energy sector. Geographic diversification to reduce reliance on the Middle East as the main source of crude oil, as well diversification by energy type to include more liquefied natural gas, are providing the impetus for many new energy projects, he says. "Our energy clients are increasingly cognizant of the wider opportunities available to monetize stranded reserves," he adds.
Citigroup helped finance the BTC Pipeline project that will deliver 1 million barrels of crude oil a day to world markets from the Caspian Sea area. The bank also has many current mandates for LNG projects worldwide.
In the global infrastructure sector, governments in the developed countries are seeking to leverage private-sector capital without outright privatization, which can be politically sensitive. Hasty says PFI activity is continuing to spread across all asset classes, from roads, schools and hospitals to the launch of satellites and associated communications services.
In selecting the top project finance banks, Global Finance editors analyzed objective as well as subjective criteria. Among factors considered were the banks' quantitative performance over the 12 months through June, the banks' market positions, innovations in dealmaking, and the strength of the banks' project finance teams. We considered data provided by the banks and by leading international market research organizations, and surveyed key project finance attorneys, consultants and other market observers.
CREDIT SUISSE FIRST BOSTON
Credit Suisse First Boston was financial adviser and arranger on many of the leading project finance transactions in the last half of 2003 and the first six months of 2004. The bank was particularly strong in major power projects and in the North American market, where it also won awards in this year's survey by Global Finance. …