2023 Global Project Finance Outlook: Building Momentum Despite Macroeconomic Risks

We believe that the credit profile of the global project finance sector will remain stable in 2023, notwithstanding higher interest rates, inflation, and the risk of recession. Project finance covers not only traditional power generation but also large energy and industrial infrastructure projects through non-recourse special-purpose vehicles. More recently, project financings have been extended to a wider scope of sectors globally, including digital infrastructure. The highly leveraged project finance transactions are structured in a way to limit their exposure to typical business risk and/or macroeconomic variables.

Except for several isolated areas discussed in this outlook, we believe that the current macroeconomic headwinds will not materially or systemically affect the overall performance of our project finance portfolio. Potential positive or negative rating actions will be primarily driven by the idiosyncrasy of individual projects rather than by their correlation with macroeconomic variables. We believe that, overall, the rating actions we may take on the sector will be neutral in 2023. Despite the uncertain macroeconomic headwinds, we expect that global project finance transactions will continue to grow in the coming years, driven by the acceleration of energy transition and digital infrastructure assets.