Project Finance Sector Unlikely to be Meaningfully Affected by Banking Sector Liquidity Concerns

We do not anticipate taking any near-term rating actions on any of our rated project finance transactions because of the failures of Silicon Valley Bank (SVB; unrated by DBRS Morningstar) and Signature Bank (unrated by DBRS Morningstar) and the ensuing liquidity concerns about a few other banks, such as First Republic Bank (unrated by DBRS Morningstar) and Credit Suisse AG (rated BBB with a Negative trend by DBRS Morningstar), within the broader banking industry. We view the likelihood of a direct impact on the project finance sector from any loss of access to critical cash resources as low.

Accordingly, 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. Potential positive or negative rating actions will be primarily driven by the idiosyncrasy of individual projects rather than by their correlation with macroeconomic variables. See our commentary “2023 Global Project Finance Outlook: Building Momentum Despite Macroeconomic Risks,” published on January 26, 2023, for more details.