Innovative financing for a world that has changed

Innovative financing for a world that has changed

Innovation is often associated with terms such as new technologies, artificial intelligence, sensor technology, blockchain, etc. All these words are part of the innovation universe, but this concept is much wider and refers, first of all, to how we relate to a world which is constantly changing.

The 2007-2009 international financial crisis and its devastating effects on the economy brought about the creation of Basel III; this increased requirements for banks operating internationally in order to improve financial stability. The goal was to prevent a repetition of the mistakes which triggered the biggest economic crisis of recent decades.

The measure imposed a series of requirements on capital and liquidity for financial institutions which forced banks to restrict and increase the cost of credit for long-term projects, such as those involving infrastructure concessions. And this is precisely where Rodrigo Jiménez-Alfaro, Santiago Eguía Díaz de Rada and Juan Rodríguez de Tembleque, of Sacyr Concesiones, set to work to find solutions that would change the traditional financing model.

Their efforts and their results have won them Sacyr's “Natural Innovators” award.

“Traditionally, concession-related projects have been financed through Project Finance debt structures granted by commercial banks directly to the concession companies”, explained Santiago Eguía.

However, in the last few projects undertaken by Sacyr Concesiones, use has begun to be made of new, non-banking financing parties, such as insurers and pensions funds, through international bond issues.

The vacuum left by traditional banks was taken advantage of by institutional investors which, through more innovative credit structures such as those mentioned, were able to begin financing longer-term projects with lower costs for the customer.

“The main advantage of this new form of financing is that it offers us the chance to obtain debt without having recourse to Shareholders, over very long terms (20 - 25 years) and with very competitive rates. Other benefits are the diversification of the company’s sources of financing and the chance to generate cash flow by increasing non-recourse debt in existing financing”, he stated.

Santiago Eguía Díaz de Rada expressed his gratitude for the “Natural Innovators” award and explained his initial feeling of “surprise” when, together with his colleagues, he received “an innovation award in a financial area”. “But, above all, it has been a matter of great pride for the entire financing team of Sacyr Concesiones to obtain the recognitiion of our colleagues for the hard work there is behind financing for our concessions”, he added.

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