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Deal structuring
in the context of
project financing
transactions
Credit rating and
collateralisation
determine loan terms
Prudent loan
management
The trend towards large-volume financing transactions with industrial corporates was continued in
the reporting year. Against the background of portfolio control by banks, the syndicated financing
business has grown in significance. In the future, Investkredit will extend its function in underwriting
partnerships, as shown today in the strong increase investment volumes.
2001 saw an increase in the level of project financing transactions. Starting out from the establishment
of independent companies these types of loans are serviced out of the relevant project’s sources
of earnings. The bank’s tasks in relation to structuring such deals range from the legal planning of the
transaction to economic feasibility studies and ongoing project controlling. These models are mainly
applied to real-estate transactions and public-private partnerships.
The arrangement of loan terms depends on specific credit ratings and the provision of security.
While liquidity is agreed on a long-term basis, the interest rate adjustment is in many cases related to
covenants, i.e. the credit margin is developing according to the relevant corporate’s rating. The settlement
of margins is thus linked to the dynamism of the corporate’s economic development. In many
cases the corporates have anticipated the interest rate cuts of the European Central Bank and have
taken out variable-interest loans. In contrast, towards the end of the year, an increased interest in
fixed-rate loans was seen.
The cyclical downturn in the second half of 2001 has also contributed to the fact that Investkredit
paid special attention to its loan management. In individual cases it became necessary to increase
collaterals. The importance of a contractual safeguarding of liquidity is pointed out in detail when
talking to our customers. In accordance with the accounting and valuation principles, the required
level of individual value adjustments has increased along the cyclical curve.
The following table shows the regional breakdown of the lending business in the reporting year and
cumulated since 1957.
Regional breakdown of financing transactions with corporates
Regions Financing 2001 Financing 1957 – 2001
in EUR m Share in EUR m Share
Vienna 163 23 % 2,446 25 %
Lower Austria 62 9 % 1,619 17 %
Upper Austria 46 6 % 1.394 14 %
Styria 26 4 % 856 9 %
Tyrol 76 10 % 825 9 %
Salzburg 23 3 % 485 5 %
Carinthia 6 1 % 421 4 %
Vorarlberg 40 6 % 407 4 %
Burgenland 2 0 % 45 1 %
Total – Austria 444 62 % 8,498 88 %
Europe 86 12 % 427 4 %
Rest of world 190 26 % 738 8 %
Total – international business 276 38 % 1,165 12 %
Grand total 720 100 % 9,663 100 %
In the year under review, Vienna, Tyrol and Lower Austria had the largest share of financing. In terms
of cumulative regional financing, Vienna, Lower Austria and Upper Austria are still in the lead.
Corporates
THE BANK FOR CORPORATES
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