Brussels, 31/07/2013 (Agence Europe) - The very first project bonds, backed by the European Investment Bank, have been successfully launched on the market, the EIB announced in a press release on Tuesay 30 July. They will be used for investment in the Castor (Catalonia) underground gas storage project, that will provide storage for 30% of Spain's daily gas consumption.
The EUROPE 2020 Project Bond Initiative, a joint programme by the European Commission and the EIB launched in November 2012, is designed to stimulate capital market financing for infrastructure delivered under project finance structures. The €1.434 billion bond issue for the Castor project was supported by a €200 million liquidity line under the Project Bond Credit Enhancement Initiative which allowed the project to achieve a credit rating more attractive to investors. The EIB will also purchase €300 million of the bonds as an anchor investor. The project was selected with a view to encouraging capital market investment worth more than €4 billion for transport and energy investment and because it is of strategic importance for Spain, which has limited gas storage capacity.
The bond will be used to roll over debt initially contracted from banks, thus extending the maturity of the financing to 2034. The €200 million liquidity line will be activated if the project is unable to service its debt. By providing this buffer for the debt, the EIB increased the bond credit rating by two notches (BBB according to Standard & Poor's, and BBB+ by Fitch. (OL/transl.fl)