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The pilot phase of the Europe 2020 Project Bond Initiative

The pilot phase of the Europe 2020 Project Bond Initiative

The Commission has adopted on 19 October 2011 a legislative proposal launching the pilot phase of the Europe 2020 Project Bond Initiative. The Initiative aims to revive and expand capital markets to finance large European infrastructure projects in the fields of transport, energy and information technology.

The European Commission, building on the encouraging feed-back received during the public consultation in spring 2011, is proposing to launch a pilot phase of the Europe 2020 Project Bond Initiative. The scope of this pilot phase is to test the project bond concept during the remaining period of the current multi-annual financial framework 2007-2013. The pilot phase of the Initiative will only start its operations once the European Parliament and the Council have approved the legislative proposal amending the Trans-European Networks (TEN) Regulation and the Competitiveness and Innovation framework Programme (CIP) Decision and redeployed existing budget allocations of these programmes. The pilot phase would be implemented together with the European Investment Bank (EIB) once the EIB's governing bodies have agreed to it.

The objectives of the pilot phase of the Initiative are two-fold:

  • to establish debt capital markets as an additional source of financing for infrastructure projects and
  • to stimulate investment in key strategic EU infrastructure in transport, energy and broadband.

The aim is to attract institutional investors to the capital market financing of projects with stable and predictable cash flow generation potential by enhancing the credit quality of project bonds issued by private companies. The intention is to support capital market financing of projects as a form of finance to complement loans, not to replace other sources of financing, such as grants, nor to intervene in stages prior to financing, such as feasibility studies, assessments or procurement, where grants are also widely used.

Commercially viable infrastructure projects in the EU, which are eligible for funding under the TEN-T or TEN-E policies or under the CIP-Decision on broadband, could benefit from the initiative.

Next steps

The Commission approved the proposal to launch a pilot phase on 19 October 2011. Before entry into force, this proposal is subject to modification by the co-legislators, the Council of Ministers and the European Parliament. Both are reviewing the proposal as a matter of priority with a view to adoption of the proposal in summer of 2012."

The informal meeting of the European Council of 30 January agreed to examine by June the Commission's proposals on a pilot phase for the use of "project bonds" to stimulate private financing of key infrastructure projects."

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Last update: 13/02/2012 | Top