The concept is for governments to facilitate, through fiscal policies or otherwise, an "infrastructure bond" market. It could draw on public savings or, more likely, on institutional funds. A state agency could "organise" liquidity, in order to make this market attractive to a broader group of investors.
PROS: In theory, it is the most efficient and cost effective approach to attract capital markets. Direct risk participation of investors would gradually raise their level of awareness and understanding of the infrastructure market, improving its liquidity and facilitating its long term growth.
CONS: Accessing the bond market directly implies finding, through structural adjustments, the meeting point between investors' appetite for more complex and structured products and "de-risked" project structures. This is likely to prove difficult and may only attract a set of sophisticated players. Construction risk, in particular, may remain a stumbling block.
The impact on affordability of the "de-risking" necessary to achieve higher project ratings needs to be ascertained.
Direct investment through private placements has proved to be difficult to implement in a tender situation.
Poorly structured projects may lead to defaults and jeopardise further issues.
In any event, the procuring authority can only influence the "project" side by engineering or imposing higher ratings and has little bearing on the investor's side.