Also working to its advantage is the globalization of financial markets, which has helped create a broad spectrum of financial instruments and new classes of investors
For developing markets, project finance holds out the hope that a well-structured, economically viable project will attract long-term financing even if the project dwarfs its sponsors‘ own resources or entails risks they are unable to bear alone. With such a mechanism for sharing the costs, risks, and rewards of a project among a number of unrelated parties, a privatization or infrastructure improvement program will have a greater chance of raising the volume of funds it requires.
As a result, it is now standard practice for large and complex projects in the major developing markets to employ project finance techniques. The total volume of project finance transactions concluded in 1996 and 1997 before the financial crisis (an estimated 954 projects costing $215 billion) would have been hard to imagine a decade ago. The number of active participants in these markets also increased as many international institutions (investment banks, commercial banks, institutional investors, and others) moved quickly to build up their project finance expertise.
The financial and economic crisis of late 1997 in East Asia, the site of much recent growth, and in other countries since then has dramatically slowed market evolution. The financial capacity and willingness of many banks in these countries and of other potential investors to support large projects has also been eroded. As a result, sponsors in East Asia, both private and public, have canceled or deferred numerous major projects. The ones still under implementation, particularly those financed during the past few years, have come under increased stress in the face of reduced market demand for their output or related sponsor problems.
With the prospects for economic growth slowing worldwide, other countries and regions are also structuring projects more conservatively. Pokračovat ve čtení „The estimated number of projects in developing ount of $60 billion“