Governance Impact on Private Investment Evidence from the International Patterns of Infrastructure Bond Risk Pricing

During the last decade, infrastructure finance and provision graduated from traditional means to more innovative ones, primarily initiated by private companies and supported through their equity and debt. Capital markets increasingly became the main funding source for infrastructure projects worldwide, including investments in developing and transition countries where infrastructure penetration still falls considerably short of needs. Infrastructure bonds served as the most popular method of oil, gas, electricity, telecommunications, and transport project financing in these countries throughout 1990-99, thereby substituting government funding. Using an innovative methodological approach, this research paper provides a thorough examination of the effect that governance frameworks, both political and regulatory, have on investorsA' risk perceptions and on associated costs for infrastructure financing. It identifies those political and regulatory risks that most concern investors. It offers a unique comparative analysis of developed and emerging infrastructure bond markets. The analysis demonstrates how the factors that drive infrastructure finance in the two country groups differ, which helps to identify the policy implications of these factors.Bubnova, Nina B. is the author of 'Governance Impact on Private Investment Evidence from the International Patterns of Infrastructure Bond Risk Pricing' with ISBN 9780821348185 and ISBN 0821348183.