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Spain launches first venture financed by EU ‘project bonds’

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Published 02 September 2013
17 comments
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project bonds

A large offshore submarine gas storage facility in Spain was the first in Europe to issue ‘project bonds’ for a total of €1.4 billion, three years after the idea was launched by European Commission President José Manuel Barroso.

Speaking at the European Forum Alpbach in Austria last week (29 August), the European economics and finance commissioner, Olli Rehn, said the large underground gas storage project in Spain recently became the first to use a project bond under the pilot phase of this joint initiative by the Commission and the European Investment Bank (see background).

The Castor project could be seen as “an encouraging sign of confidence” in crisis-hit Spain, Rehn claimed. "Successful issue by Castor of the first project bond is a welcome sign of increasing support for long-term investment essential for sustainable growth in Europe," he added.

The European Investment Bank (EIB) announced recently that the first transaction under the Project Bond Credit Enhancement initiative had successfully taken place and would benefit the Spanish gas storage project.

Located off the east coast of Spain, the Castor natural gas storage facility is expected to cover 30% of Spain’s daily gas consumption. It is being developed by ACS Group and Dundee Energy Ltd. The promoter is the Spanish Ministry of Industry.

The €1.4 billion bond issue for the Castor project was supported by a €200 million liquidity line under the Project Bond Credit Enhancement Initiative, improving its credit rating among investors. The EIB will provide a total of €500 million for the project and will also purchase €300 million worth of bonds as an anchor investor. 

“The European Investment Bank is committed to supporting investment essential for Europe’s future and congratulates Castor for successfully demonstrating how using project bond credit enhancement can enable increased support for long-term investment during challenging economic times”, said Werner Hoyer, the president of the European Investment Bank.

He said the pilot phase of the joint EIB-European Commission project bond credit enhancement initiative should add a new dimension to the EU bank’s contribution to financing infrastructure in Europe.

To date nine energy and transport projects eligible for project bond support have been approved by the EIB Board in six EU countries. These include motorway projects in Belgium, Germany, Slovakia and the UK, grid connections to offshore wind farms in Germany and the UK, and gas storage facilities in Italy and now Spain.

The Castor project is expected to be followed by additional project bonds later this year and in 2014. Under the project bond model, bonds are issued by the project companies themselves, and not the EIB or the member states. The role of the European Investment Bank is to provide credit enhancement through a subordinated instrument, either a loan or contingent facility, to support the senior debt issued by the project company.

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COMMENTS

  • So the unelected commissars give our money to Spain to pay for this and an unelected commissar states that it is a sign of confidence in Spain, although it will require even more of our money in the near future, Hmmm I wonder which planet these parasites originated on.

    By :
    Barry Davies
    - Posted on :
    02/09/2013

  • @Barry Davies - Posted on : 02/09/2013

    We need more European Union help ! Even more Bonds!!

    Mr Davies.. It's just that some parasites acting in a selfish manner in contributing no funds at all which will lead into the same example as in Detroit!

    By :
    an european
    - Posted on :
    02/09/2013

  • @Barry Davies - Posted on : 02/09/2013

    We need more European Union help ! Even more Bonds!!

    Mr Davies.. It's just that some parasites acting in a selfish manner in contributing no funds at all which will lead into the same example as in Detroit!

    By :
    an european
    - Posted on :
    02/09/2013

  • Well you must accept that as Spain has always been a net receipient that it is acting in a selfish manner in your opinion, it is nations like Spain, and the piigs nations that are holding back any economic recovery in the eurozone. I am pleased that you have finally accepted that as the parasite nations contribute nothing but take a lot that they will lead to a melt down of the eussr just like in Detroit.

    By :
    Barry Davies
    - Posted on :
    02/09/2013

  • Mr Davies

    Every one, (Your) Piggs too wants the best of the Europoean Union à la carte Even the piggies (which i ddon't see the main problem!)

    - Single Market
    - Free Trade
    - Single EMU
    - Single Telecommarket!
    - bla
    - bla

    Without the rule of federal policies which are the prerequesities for a strong economie is missing!
    At least a minimum of little european constitution is unavoidable !

    You said: "Well you must accept that as Spain has always been a net receipient that it is acting in a selfish manner"

    I say: NO ! Some member-states profits from the negative depth interests rates in which doesn't let breathe some countrie's economies without a depth interest pool !

    Many leaders acts in a irresponsible manner !

    El Pluribus Unum

    By :
    an european
    - Posted on :
    03/09/2013

  • an european you are wrong about everyone wanting europe a la carte, we want what we were told we had signed up for that is a free trade zone, nothing else, the economies of the eussr nations were stronger without the interference of the would be federal government of the eussr unelected commission. There is no european constitution because some nations are free of the eussr, it is the eussr constitution which was illegally enforced after being democratically rejected. All the eussr leaders act in an irresponsible manner.

    By :
    Barry Davies
    - Posted on :
    03/09/2013

  • I am a bit fed up with people that refers to Spain and the rest of Mediterranean countries within the EU as "pigs". Do you think you are superior because your economies are in a better situation than such ones? You simply have more money but you lack of certain qualities, i.e. education and respect. If such countries are in the EU it is because is was a good bussiness for the EU. Spain didn't pay enough attention to its industry and other resources, in my view and focused on tourism and services once inside the EU and at request of the EU. It was a mistake of course, but if we are in so hard conditions it is because Spanish banks made bussinesses with German banks and the latter must be protected, as Germany controls the EU.
    Why do you think that so many retired and wealth people come to Spain? Because the quality of life and services is excellent and cheap. I am looking forward to get out of this lie (EU) altogether with greeks, portugueses and italians and to start to get real revenues on what we have and that "Europeans with an air of superiority" lack of. ¡Viva el Sur!

    By :
    dissapointed
    - Posted on :
    03/09/2013

  • Via the backdoor drowning €Uuropean citizens in even more debts without any say in it, does indeed remind of practices that the EU aimed to forestall.
    Already the €U is underwater with a 130% of debts and guarantees in relation to the memberstate budgets.

    Why could this not be financed in Peseta's? As the debt of Greece should be financed in Drachmes.

    By :
    Willem, a Dutchman
    - Posted on :
    03/09/2013

  • Via the backdoor drowning €Uuropean citizens in even more debts without any say in it, does indeed remind of practices that the EU aimed to forestall.
    Already the €U is underwater with a 130% of debts and guarantees in relation to the memberstate budgets.

    Why could this not be financed in Peseta's? As the debt of Greece should be financed in Drachmes.

    By :
    Willem, a Dutchman
    - Posted on :
    03/09/2013

  • disapointed you are not referred to as pigs, as in wonderful loving animals that make great food, but as part of the piigs i.e. portugal ireland italy greece and spain the economic basket cases of the eurozone. Clearly your education is not quite so good as you think it is.

    By :
    Barry Davies
    - Posted on :
    03/09/2013

  • Name-calling is not on.

    Bonds work.

    Regrettably they are being used for Motorways in the UK..what a farce..they want to pull out of the EU as well.

    The UK Economy is not that robust relying on Service Industries and Banking to survive. When the USA Economy drops - as sure as it will in two years time - so will the UK Economy drop again. It has no real export potential and that says it all.

    The Southern EU States have played host to spending money from their coffers to buyup UK Institutions left-right-and-centre: Santander Banks, Foccacio, IUG (originally Spanish Airways) and there are others, and now it is following the stupidity of Fotball (Soccer) issues with grossly-inflated egos of clubs valuing players beyond reason so that the Non-European Union Investers can pick up the debts.

    In the real world the countries of the EU cannot survive independently without some moderating and consensual voice. So we must stop name-calling and get on with business.

    By :
    Keith Cordon
    - Posted on :
    03/09/2013

  • Keith Cordon no one called anyone any names at all. piigs is used by the eussr so take it up with them if you think it is wrong. What bond money is being used on UK motorways? Clearly you do not either live or work in the UK or indeed consider yourself to be British. Your use of "they" to refer to the Uk gives you away.

    If the US economy drops the whole world will suffer again just as it did in 2007, when the US sneezes the world catches cold so I don't see the point of your statement.

    I have no argument with the amount of money billionaires spend on footballers is obscene, and the amount they earn is beyond reason, but it is an international entertainment industry and like other parts of that industry music etc is vastly over rated and over paid.

    The eussr regulations from the unelected commission has lead to instability throughout the region, not just the eurozone, although that area is the worst affected. In the real world countries not in the eussr survive very well, without having to lose out because of membership of a corruption ridden democratically deficient uneeded body of politicians. Getting on with business would be far better out of this politically unstable mess.

    By :
    Barry Davies
    - Posted on :
    03/09/2013

  • Barry Davies, you don't even deserve a comment, it is clear for me what you think about southern countries.

    Willem, a Dutchman, in my view if the EU is underwater with a 130% of debts and guarantees in relation to the memberstate budgets, EU citizens should call for an audit to determine what is an odious debt and what a real debt. In spite of the national problems, the crisis has been caused because of the countries relying on speculative economy (Banks, stock markets...) and not in real economy. Citizens shouldn't pay for it, but the real debtors: banks, etc...
    The question is not having pesetas or other national currencies (it would be another discussion). The question is that the finances in the EU shouldn't be a decision of powerful countries but a task of a Federal organization with different aims for the ECB among other considerations. Of course europeans haven't been asked for it. This is why I would like to get out of "this" short-sighted Europe, where citizens are subject to corporations interests', German banks among them.

    By :
    dissapointed
    - Posted on :
    03/09/2013

  • dissapointed don't be so paranoid, Ireland is not a southern Country, if you look in your Atlas you will find it to the left of Great Britain and underneath Northern Ireland. It is one of the I's in piigs so your comment that you made despite saying that you didn't think it deeserved comment, typical europhile politspeak.

    As for the Audit the independant accountants that have audited the eussr finances have not signed off the eussr finances as being correct for at least the last 20 years, because the eussr doesn't seem to know where our money goes. The idea that a federalisation of the nations would be better at deciding on the aims of the economies of so many different economies is absurd, the idea is to have the powerful countries who subsidize the parasite nations of the eussr be able to keep being in a position to do it because the parasites have shown that they can't do the job themselves. At least you have reasoned that the best way forewards is to get out of the eussr.

    By :
    Barry Davies
    - Posted on :
    03/09/2013

  • It's sad to read so negative comment's about southern states! I'm disgusted !

    By :
    an european
    - Posted on :
    03/09/2013

  • Are you sure you aren't disapointed An european, seems to me that you think Ireland is a southern state as well. Hard to believe two so called pro europeans don't even know where the nations are placed in the world.

    By :
    Barry Davies
    - Posted on :
    03/09/2013

  • @ Barry
    The guy who posted wrote "disSapointed"

    It's NOT me !

    Cheers

    By :
    an european
    - Posted on :
    04/09/2013

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The Castor offshore gas storage platform
Background: 

In his 'State of the Union' address to the European Parliament in September 2010, Commission President José Manuel Barroso spoke of an initiative to establish EU 'project bonds' issued in conjunction with the European Investment Bank (EIB).

The idea of using bonds to finance the European budget was launched for the first time by former European Commission President Jacques Delors with his 1993 plan for growth, competitiveness and employment, the predecessor of the Lisbon Agenda.

But the majority of member states opposed the idea, fearing it would ultimately increase their expenditure on the Community budget.

In October 2011, Barroso mentioned a figure – €50 billion – to be raised for projects in the transport, energy and telecoms sector, using project bonds.

On 22 May 2012, the EU institutions agreed to launch the first ‘project bonds’ as a pilot project to boost investment in energy, transport and the digital economy. It was decided that the EU will set aside €230 million in guarantees and will focus on encouraging capital market investment worth more than €4 billion for transport and energy investment.

>> Read: ‘Project bonds’ launched as an experiment

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