Project Finance in Benelux: A regional overview

A summary of the trends, significant deals and challenges in the region at present.

Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through - Dominance 2018 (Published: April 2018). For further information please visit

What have been the trends over the past year or so in terms of deal activity in the project finance sector in your jurisdiction?

Marieke Driessen, Frédérique Jacobse and Andrea Chao: 2017 was a relatively active year for the project finance sector in the Netherlands with a number of projects reaching financial close during this period. This is testament to the fact that there is a strong deal flow in the Netherlands (although the number of projects actually brought to the market was less than originally expected). This continues the trend we have seen develop over the past couple of years, which clearly reaffirms the stability and maturity of the Dutch project finance market. The types of projects that closed in 2017 were, as in previous years, quite diverse, mainly including road and water infrastructure public-private partnerships (PPPs), renewables of different sorts (including rooftop and ground-mounted solar PV systems, on and offshore wind, biomass, biogas), but also featuring refinancings of data centres and geothermal assets.

The Dutch project finance market continues to attract a mix of domestic and international lenders, public financing institutions (such as European Investment Bank (EIB) and Japan Bank for International Cooperation (JBIC)), debt funds and institutional investors. In particular, more banks have become active in the offshore wind market as this sector continues to mature, resulting in increased competition leading to higher leverage and lower margins for refinancings. Also, the involvement of institutional investors continues to be strong, providing a welcome additional source of funds, although on the debt side it is likely to be limited to refinancing transactions because of the bank lending market being much more competitive. Some noteworthy debt strategy trends have continued, which can be summarised as follows:

  • there is an increasing number of lenders prepared to take large tickets (for example, in the offshore wind market, commercial banks have been underwriting up to a maximum of €75m-€150m) in addition to being involved in more than one deal per year and being willing to take increasing construction risk
  • at present, the more traditional domestic or European institutional investors are often lending alongside institutional investors coming from Canada, the United States, Japan and China that have been looking for opportunities in the Dutch market, and
  • there has been an increase in the number of refinancings at different stages of development.

This refinancing trend is supported by factors such as margins being low, which still makes debt cheap; financing structures being relatively stable in terms of ratios and covenants; project costs coming down, with more competition across the variety of project phases from development to operation; and finally, in the offshore wind market, there is generally a better understanding of the construction risks, which makes for a reduction in the risk premium element. In relation to offshore wind, projects no longer need to rely as much on government subsidies, and market participants are able to access a variety of funding sources in addition to project financings

Carl Meyntjens and Kelly Cherrette: Belgium is a mature market in terms of project finance, which is used across the whole gamut of sectors, and for projects ranging from missing-link roads and toll projects to social housing, schools, sport infrastructure, prisons, etc.

In the past several years, some major projects have been put on hold - and even had to be retendered - following Eurostat’s scrutiny of Belgium’s budget treatment (off balance) of PPPs. This issue has been resolved, both in the Walloon Region and in the Flemish Region, following negotiations with Europe (and the issue of the guidance paper on the Eurostat treatment of PPPs). With these negotiations and the guidance paper providing clear parameters (and detailing the impact of PPP features) for Belgian governments to take into account for balance-sheet treatment, the market has revived.

Post-subprime and Euro crises, the resurgence of refinancings that we have seen over the past several years continued in 2017. Taking advantage of the prevailing low interest rates and the competitive bank market environment, a number of major refinancings completed in 2017.

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