Each bank has an industry limit, a country limit and a client limit. Nowhere is more appealing to sponsors than the vast US bond market. This puts UK firms in a double bind. Not only must they offer capital markets expertise, they must also try to compete with US law firms in the 144a market - those firms with no US lawyers better get their skates on. There is no doubt that bonds are here to stay.
Bonds have some obvious advantages for project finance.
Because projects are financed over the long term, longer maturities are often more suited to the sponsors than traditional bank financing. Bond investors are also willing to accept looser restrictive covenants. What's more, the market for issues, particularly in Europe, looks set to grow. For the bond investor, project finance can offer hefty returns backed by a productive asset. But capital markets have their drawbacks.