Experts opt local currency deals infrastructure financing

Here are some experts' opinions on the benefits of using local currency deals for infrastructure financing:

1. Reduced Currency Risk: Using local currency deals can reduce currency risk, as the borrower is not exposed to fluctuations in foreign exchange rates. This can be particularly beneficial for countries with volatile currencies.

2. Increased Funding: Local currency deals can attract more funding from local investors, as they are denominated in the local currency and offer a higher return compared to foreign currency-denominated bonds.

3. Improved Liquidity: Local currency deals can improve liquidity in the local financial market, as they provide a new source of funding for local banks and other financial institutions.

4. Enhanced Sovereign Risk: Local currency deals can enhance sovereign risk, as the borrower is more likely to default on its debt obligations if it is denominated in the local currency.

5. Reduced Dependence on Foreign Capital: Local currency deals can reduce dependence on foreign capital, as the borrower is not reliant on foreign investors to finance its infrastructure projects.

6. Increased Transparency: Local currency deals can increase transparency, as the borrower is required to disclose more information about its financial situation and debt obligations.

7. Better Alignment with National Priorities: Local currency deals can better align with national priorities, as the borrower is more likely to prioritize projects that benefit the local economy and population.

8. Reduced Risk of Capital Flight: Local currency deals can reduce the risk of capital flight, as foreign investors are less likely to withdraw their funds if the debt is denominated in the local currency.

9. Increased Use of Alternative Financing Mechanisms: Local currency deals can increase the use of alternative financing mechanisms, such as public-private partnerships (PPPs) and infrastructure bonds.

10. Improved Creditworthiness: Local currency deals can improve creditworthiness, as the borrower is more likely to demonstrate its ability to manage its debt obligations and maintain a stable financial situation.

Some examples of local currency deals for infrastructure financing include:

Overall, local currency deals can provide a more stable and sustainable source of funding for infrastructure projects, while also reducing dependence on foreign capital and improving creditworthiness.