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Banks might not finance Argentinian high-speed rail project

Posted on October 21, 2008 by Matthieu Desiderio

Financial crisis does not only affect the banking industry. In France, is seems it now reaches the “real” economy. A few days ago, French bank Groupe Caisses d’Epargne announced some €600 million losses, and this might eventually affect… the Argentinian high-speed rail project!

Quick explanation: Alstom, part of a consortium, won the call for tender for the $1.5 billion high-speed rail project (700 kilometers line between Buenos Aires and Cordoba). However, the consortium awarded French bank Natixis to finance this project… Poor choice since Natixis is the investment bank born from a joint-venture between Groupe Caisses d’Epargne and Banques populaires, and is the one that has been the most affected by the subprime crisis…

Natixis was supposed to bring up a $1.3 billion loan over 30-year to finance the project, and might not be able to close the financing… After Société Générale that was supposed to finance up to 70% of the project, Natixis might be the second one to abandon. What’s next? In a period when banks can not even manage to finance infrastructure, will States be able to relaunch our economies. Usually, infrastructure was the way to do… it seems it will be more difficult this time?

References

  • Article: Le TGV argentin victime de l’Ecureuil, Le Parisien, Oct. 21, 2008: here

References from the Transport Information Group

Category: PPP, contracts, economics, finance, high speed rail, passengers, projects, public transport, rail, transport