The LGTT was set up and developed jointly by the EIB and the European Commission with the aim to attract a larger private sector participation in the financing of revenue-risk TEN-T projects. The instrument enables the transfer of demand risk inherent in a concession-based PPP project during the early years of operation thereby significantly improving the financial viability of the project and making the capital structure more robust. By providing the guarantee the EIB is taking over this risk by potentially becoming a mezzanine lender to the project. The flexibility of the LGTT structure permits a tailoring of the product to fit the needs of the project. The product also fits with state-guaranteed senior debt and is particularly suited to address the easing of refinancing in mini-perm structures.
The EIB and the EC have committed capital of EUR 500 million each to support LGTT operations of around EUR 5 billion until 2013. The EC contribution is made from the current TEN-T Budget while the EIB part is under the Structured Finance Facility (SFF) capital allocation. The SFF is the EIB's main facility for increased risk taking, established in order to support projects of European importance including large-scale infrastructure schemes. The LGTT was launched in 2008 and since than it was used in four PPP road projects that reached financial close with a total guarantee amount of EUR 140 million.