Project bonds : how this alternative source of funding can bridge the financing gap for infrastructural projects with focus on the Maltese economic environment

Abstract

The aftermath of the financial crisis led to stricter regulations being imposed upon banks, resulting in developers and Governments to consider other means of financing, rather than the traditional loans provided by banks. Project bonds provide an alternative and competitive source of financing, as they offer long maturities with steady returns. The research examines the possibility of introducing project bonds in Malta by analysing current project bonds around Europe and the current situation of the bond market in Malta, including the challenges of introducing such bonds on the Maltese market. Additionally, the study goes into EU’s objectives to stimulate capital market financing to reach the European 2020 targets in various sectors and the EIB initiatives to increase project bonds activity in the European Markets. Different stakeholders including a Government official, an international underwriter and representatives from local companies took part in the research and various issues were discussed to compile a set of results on the subject. The research outcome suggests that project bonds are a feasible option for Malta to finance infrastructural projects that include projects in the energy, transport, and information and communication technology (ICT) sectors. However, there are some challenges to overcome to ensure that project bonds could be successful when implemented in Malta.