Brian C Kelsall of Fasken Martineau DuMoulin takes a closer look at the Canadian project finance market.
"Although Canada has been affected by some of the market turmoil that has spread across Europe and the United States, its strong economic performance, conservative banking system and careful deficit control has allowed Canada to continue to remain a very bright light in the projects and PPP market worldwide."
Despite continuing economic uncertainty around the world, Canada remains a major player in the global projects and PPP market.
In 2010 and 2011 there was extraordinary activity in the Canadian market. A large number of high-profile projects were closed, including the Communications Security Establishment Canada Long Term Accommodation Project in Ontario, the McGill Hospital and CHUM Hospital Projects in Quebec and the Windsor-Essex Highway Project in Ontario.
In 2012 there was a slight dip in the number of major projects brought to closing but generally, across Canada, the trend remains strong, with the Anthony Hendy Highway Project in Edmonton, the Evergreen Light Rail Project in British Columbia and the 407 Extension and Ottawa Light Rail Projects in Ontario all closing in 2012. All were major projects financed in both the Canadian and international markets.
In early 2011, the Province of Ontario announced its new 10-year plan for the continued development of infrastructure by Infrastructure Ontario using the P3 model. The plan calls for expenditures of over $35 billion in the ensuing three years with emphasis on social infrastructure, transport, waste water and other key sectors. The plan has also focused more attention on the development of infrastructure at the municipal level as well as including a strong mix of DBFM and DBF-style projects at the provincial level. Federally, Canada has announced in its most recent budget strong support for infrastructure development throughout Canada.
Project development in the energy and power sector including renewables has also been very strong in Canada over the last few years.
From a financing perspective the Canadian bond market has proved to be a very versatile market allowing the development of both pure bond and bank/bond hybrid structures for the financing of projects across the country. The Canadian banking sector also remains strong and very recently some European banks and other banks from international markets are re-entering the Canadian market and offering longer-term financing solutions for infrastructure and certain power projects.
Although Canada has been affected by some of the market turmoil that has spread across Europe and the United States, its strong economic performance, conservative banking system and careful deficit control has allowed Canada to continue to remain a very bright light in the projects and PPP market worldwide. Looking ahead, the Detroit River Crossing Customs Pavilion and Bridge spanning the Detroit River between Canada and the US, the development of the Champlain Bridge crossing the St. Lawrence River and the $6 billion Toronto-Edmonton Cross Town Light Rail Project are just a few of the major projects that are currently being pursued. As a result, Canada continues to attract market participants from across the globe, including funders, construction companies and equity investors who have taken an active interest in and have committed to the Canadian market for the long term.