European Union to underwrite project funding risks

European law firm Eversheds reports that in February 2011 the European Commission started an open discussions about supporting commercial projects of long-term returns in Member States, by sharing the risks with the major investors and insurance companies involved and thus help the hard-hit by the financial crisis investment market get back on track.

The initiative is planned to attract private funders as well, by developing a special cash-return system, whereby  investors’ claims will be satisfied before those of  shareholders.

The plan is attractive to both sides in investment events as: 1) investors will have more confidence in getting their money  back and their own credit ratings; 2) whilst applicants for funding will get more interest from funders as the EU will underwrite their project’s risks.

However, not all project funding applicants will be able to count on benefitting from the scheme as preference will be given to the best projects which will be mainly in the energy and contruction field. To qualify, the projects will need to present sound economic and technical footings together with advantageous long-term returns.

[EU and Financial News Contributor]

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