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Infrastructure bonds by Katie Kelly
Bank loans have traditionally been the life blood of the infrastructure sector. However, a decline in long-term bank
lending, together with the disappearance of many monoline insurers in the wake of the financial crisis, have massively
affected the sector: first, bank financing is no longer as readily available; and second, the credit enhancement that a monoline insurer would have provided (in the form of a guarantee) no longer exists. Coupled with these factors is general austerity – public sector funding is generally being
reduced owing to government cut-backs on infrastructure spending (although there are signs of revival, not least in the UK), all of which serves to hamper economic growth.