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Infrastructure securitization: Asset class builds momentum

The refinancing of the Grupo Ferrovial takeover of BAA will be a showcase for infrastructure securitization, the first of a number of high-profile deals expected this year.

The ABS market has long looked to infrastructure as its next big asset class. So far, though, this has produced rather more talk than action. But all that is set to change. “There is now a desire to look at real financial alternatives for infrastructure,” says Tim Drayson, global head of securitization at BNP Paribas. “Governments have fudged the issue in the past but Eurostat has now put paid to that.”

The blending of whole business, opco/propco, LBO and project financing should bear fruit. Grupo Ferrovial’s acquisition of BAA is expected to provide a showcase for the cost savings that ABS can offer. Calyon, Citigroup, HSBC, RBS and Santander have been awarded the mandate to arrange £7 billion ($12.7 billion) of senior debt for the deal. This will likely involve a utilities-style corporate securitization structure similar to those that RBS and Citi have brought in the past.

The upcoming securitization refinancing of Arsenal Football Club’s new Ashburton Grove stadium via RBS and Barclays Capital will also be a high-profile deal. Other buyouts – such as the current battle for Associated British Ports – could also yield securitization refinancings. Indeed, the growing presence of private equity funds in such buyouts will be a catalyst for deals as the funds are comfortable with securitization technology.

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