In spite of the Asian financial crisis, infrastructure project finance new issue volume in 1998 surpassed 1997 by more than 30%. The decline in the Asian volume has been more than made up by increased activity in other regions. However, this increase was accompanied with a clear negative shift in credit. The major reason was less the regional crisis in Asia than the growing impact of declining costs on the global electric utility industry. Power companies from Latin America to Europe and Asia increasingly face the challenge of maintaining their position in increasingly competitive markets. In face of this new challenge, the potential for payment defaults on infrastructure credits is becoming more significant. To address the rise in credit risk and potential for further increases in risk in Asia and elsewhere, new credit structures have emerged in the infrastructure debt market. The most important is assets pooled financing in the form of securitized, project-collateralized loan obligations (CLOs) and collateralized bond obligations (CBOs), collectively, collateralized debt obligations (CDOs).
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