Dr Thomas Rschen

1
Current financial markets and implications for
MENA

• Dr Thomas Rüschen
• Global Head Asset Finance Leasing

The German Arab Business Forum, June 25th 2009
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Contents
Current developments in the banking market
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Project Finance market caught up in the crisis ?
2
Impact on banking in MENA
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3
1
From large liquidity overhang to its scarcity
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Liquidity crisis have changed the economics of
financing by banks
1

• Reduction of overall debt availability
• Leverage has decreased
• Margins are up despite the lower interest rate
  levels
• Tenors are compressing in contrast to the long
  (20 years plus) tenors seen in pre- credit
  crunch lending, mini-perm structures have been
  introduced into many projects

5
Project Finance post crisis market dynamics
2
6
Liquidity flows predominantly in form of loans
3

• Overall issuance (PF, CF etc.) in MENA show
  strong dependence on loan market
• MENA (local currency) bond markets underdeveloped
  lacking liquidity, investor base and
  regulations (single currency would help)
• MENA PF shows similar increasing dominance of
  loans as global PF market
• Stable but higher share of equity compared to
  global PF market - given i.a. less highly
  leveraged PFI-type structures in the past
• No PF bond market after 2006 and very little
  issuances in the past
• Declining PF market in 2008
• Need to increase bond share in order to diversify
  market and access additional liquidity

vs.
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The increasing role of ECAs and multilaterals to
ensurefurther liquidity flow
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• Significant increase in ECA/Multilaterals share
  in PF loans in MENA
• Q1 2009 may not be representative as absolute
  numbers are too small
• Major players include Asian ECAs, IDB and IFC as
  well as some European DFIs
• Preference for additional liquidity rather than
  guarantee not all ECA provide direct loans
• More innovative structures to bring design work
  or construction equipment under an ECA cover
• (Smaller) Projects in countries with access to
  multilaterals have greater chances to raise
  liquidity