Natalia Diatlova has talked about the difficulties of issuing infrastructure securities

Partner and Head of the PPP Practice at Maxima Legal, Natalia Diatlova, took part in a roundtable event titled ‘Securities and other financial instruments and mechanisms for the capital markets in financing infrastructure projects’.  The event took place following an initiative of the National Association of Concessionaires and Long-Term Investors in Infrastructure (NAKDI) and the National Finance Association as part of the International Financial Congress.

Natalia talked about the issues of expanding financial instruments to include the use of infrastructure securities.

At the present moment, legislation does not define the meaning of securities and uses a wide understanding of securities based on their intended purpose, namely, funding infrastructure projects such as for the construction of bridges, roads, airports and hospitals. In addition, there are several types of securities simultaneously on the market. Firstly, the so-called concession securities issued by a concessionaire within the framework of a financial model under a concession agreement and secondly, those for projects issued by the Specialised Project Financing Companies (SPFC).

“A seemingly straightforward decision to allow SPFC to become a party to a concession agreement cannot currently be achieved due to inconsistencies in the federal laws on concession agreements and the securities market, particularly due to the limits on the activities of a SPFC. Since they have an exclusively financial focus, which does not directly involve the creation and subsequent operation or maintenance infrastructure that may be created. To involve a SPFC in a concession or PPP agreement, it is necessary to expand their legal capacity and to remove the discrepancies in the terms of the law on concession agreements”, emphasised Natalia Diatlova.