The upward trend of the infrastructure loans market is a bit surprising given the current pessimism surrounding the infrastructure finance markets. Some large transactions- such as the Gatwick Airport deal-were completed in late 2009. Looking at the period 1999-2002 seems to point out the historically cyclical nature of the sector.
These trends do not tell the full story of lending for infrastructure, which encompasses all sources of lending, including traditionally short-term debt more commonly needed for privatizations and acquisitions. Analysis of PPPs and concessions, which most commonly use long-term lending and rely on the monoline guarantee for bond issuance, paints a different picture that shows lending volumes falling markedly in 2009, as shown in Figures 2 and 3.
Although PPPs and concessions represent only part of the overall infrastructure market, the data clearly show the trend. Capital markets bond issuance started to contract during 2007; bank loans continued to increase during this period, but then contracted rapidly during 2009, dropping by just under 25 percent. This divergence between long-term lending and overall financing trends is apparent in both bank lending and bond markets.