ASIAN INFRASTRUCTURE FINANCE ROUNDTABLE
Philippines, May 2012
Asias infrastructure sector is surrounded by liquidity. Pension funds across the world are desperate to plough capital into regional infrastructure projects, seeking steady returns in a region peppered with robust, even booming, economies. Yet can a region thirsty for infrastructure investment both from state sources and from an often rather more dubious private sector tap into this ocean of capital? Can Asias diverse authorities and regulators convince global funds that infrastructure projects across the region can and should be trusted? And will Asia manage to build a solid legal and financial framework that drags in capital from the world and then protects it? On May 2, experts sat down to discuss the outlook for regional infrastructural development. The roundtable event was hosted in Manila by Emerging Markets.
Participants in the Asian Infrastructure Finance Roundtable, sponsored by HSBC and Moodys Investors Service were:
James Cameron, Head of Project Finance, Asia Pacific Global Banking, HSBC
Francisco F. Del Rosario Jr., President and Chief Executive Officer, Development Bank of the Philippines
Spencer Lake, Co-Head of Global Markets, HSBC
Gary C. H. Lau, Managing Director - Corporate Finance, Moodys Investors Service
Cesar V. Purisima, Secretary of Finance, Department of Finance, Republic of the Philippines
Hiroshi Watanabe, Vice President, Japan Bank for International Cooperation (JBIC)
Joe Yamagata, Deputy Director General, Private Sector Operations Department; and Chair, Public Private Partnership (PPP) Community of Practice, Asian Development Bank
EM: Mr Purisima, maybe I could start off by asking where infrastructure finance is in greatest need in Asia, and particularly in the Philippines?
Cesar V. Purisima (CP): The need for new infrastructure across the region is quite substantial; the Asian Development Bank (ADB) has estimated total demand at around $8 trillion over the next 10 years. So the challenge is: where does the financing come from? There is no shortage of funds in the region, given that the foreign exchange reserves of most countries across the region are more than ample. The question is that of how you recycle that capital inside Asia. Right now, much of the capital being created inside Asia is being recycled overseas. In the case of ASEAN, we started an ASEAN infrastructure fund in association with the ADB, and the objective is to facilitate the funding of new infrastructure for ASEAN countries. Our hope is that this will lead to investments from central banks across ASEAN.
In the case of the Philippines, the reserves of our central bank are at an all-time high, at around $80 billion, so the challenge is how we can tap that pool of capital in order to meet our infrastructure requirements. What we have done is to mobilize local savings so that we can decide best how reserves can be recycled into infrastructure investments. In the case of the Philippines there is enough liquidity around PHP2 trillion [$47.25 billion] sitting inside the central bank and we are working with the ADB, with the World Bank and with the IFC to see how we can create instruments that attract funds sitting on the sidelines, so we can match long-term funds with our infrastructure needs. We have also been trying to attract private infrastructure funds. The final point is we have opened up the longer end of the Peso curve by creating a benchmark so that banks can start offering longer-term financing to local investors, which is vital to infrastructure financing, as it matches currency risk with longer term finance.
EM: We all recognize that huge amounts of capital need to be invested in Asian infrastructure finance but where are the massive sums required going to come from?
Spencer Lake (SL): One of the areas weve been working on with multilaterals such as ADB, JBIC (Japan Bank for International Cooperation) and governments globally is to bridge offshore and onshore markets and develop new products that create liquidity within the capital structure of these entities. If you look at the pools of liquidity lying around not just here in the Philippines but across the world they are very keen to get involved in infrastructure, but theres limited mechanisms with which to do it. As a result, in the Philippines and in Thailand and elsewhere, they have created longer-dated offshore global local currency curves. Some of them are even creating inflation curves, another critical ingredient involved in funding new infrastructure. The aim now is to get long-term offshore equity and fixed income investors to come into these structures. There are a number of metrics that need to be met, but the reality is that lots of people want to get involved, and policy frameworks are created so this will facilitate this process. The ADB has a critical role to play here, as do JBIC, the EIB (European Investment Bank) along with the World Bank and the IFC. So the pieces are coming together, slowly but surely.
Hiroshi Watanabe (HW): In truth, $8 trillion worth of infrastructure investments is huge, and its not an easy hole to fill. Its still down to the fiscal constraints of each regional country, and so achieving a consensus isnt easy. Mobilizing the money that we need is vital. We have sufficient money in Asia, but all too often its still being deployed in the short term. We have a dominant banking sector but we arent so dominant on the securities side, so we need to work out how to develop the regions capital markets, and to mobilize and utilize Asian money within Asia. And we also need to secure long-term funding not just from the Asian banking sector but also from Europe and North America. So our aim is to create a facility to provide some sort of guarantee to co-financiers of infrastructure projects. One thing holding us back is that many European banks are shrinking their operations in Asia, so mobilizing funding from other banking sources is becoming more important.
Gary C. H. Lau (GL): Certainly there is a lot of liquidity in the market, but over the last decade, we havent seen a lot of infrastructure projects raising money in the cross-border capital markets. In most cases, it has come from bank loans. With the current eurozone situation, European banks ability to lend is more limited. Although Asian banks are filling the gap, with banks now facing Basel III requirements and restrictions, that could cause limitation for banks in providing very long-term financing for infrastructure project going forward. But then if you look at the real picture on the ground, theres a lot of liquidity sitting around that could be potentially channeled into infrastructure financing. In Europe or the US there is financing still going into highly successful public-private partnerships (PPPs) or other types of infrastructure projects. Here in Asia we are certainly lagging behind. There is a lot that needs to be done and changed. At the macro level, frameworks when it comes to PPP are different in different countries, so it would be positive if governments could act together in order to create a cohesive regional framework.
Francisco F. Del Rosario Jr. (FDR): With successful infrastructure financing, you need a mixture of debt and equity. With the European situation as it is right now, theres a freeing-up of funds coming in from the Middle East, so this is a source of capital that we can tap. For example Kuwaiti or Qatari funds these capital pools are very interested in investing in Asian PPPs. Secondly there are talks of regional financial integration and that process should be started and strengthened. Theres a lot of liquidity in the ASEAN market because of increased savings and fast-growing and more solid economies and a flexible financial system thats financing the entire region.
James Cameron (JC): From a market perspective in terms of relative liquidity levels across Asia, the interesting thing over the past few years has been the rise of local banks and their interest in infrastructure finance. Here in the Philippines, the domestic banks have become more sophisticated and more willing to lend into more structured products, and to lend on longer terms that are necessary requirements in infrastructure financing. Another phenomenon that we are also seeing is that capital markets are becoming more interested in refinancing greenfield and brownfield projects. So sponsors are looking on a portfolio basis to recycle capital out of the banks and into capital markets when the project has been built and derisked and then to use the banking market to go back into greenfield projects. There are huge opportunities out there in terms of stimulating Asias capital markets, and helping them to play a very major role in infrastructure finance.
Joe Yamagata (JY): We are seeing local Asian banks becoming ever more sophisticated and active. Their lending tenor is getting longer and longer. Their loan amount is getting bigger. In the Philippines, you can see local banks extending tenors of 12 years, with tenors of 20 years and more in Thailand you wouldnt have seen tenors like that five or 10 years ago. That means that local banks are set to become major players in private infrastructure financing going forward.
SL: There is a word of caution here as we have witnessed local banks around the world as theyve gone through cycles becoming very liquid and going out to lend against projects when in fact they fund in the short term. The ALM (asset liability management) mismatch is in effect one of the biggest issues that European banks are facing at the moment. But I think its appropriate for local banks and, if they can afford it, offshore banks to step in and focus on effectively bridging these projects, not attempt to only term finance for 15-20 years. Utilize the longer dated capital markets for this. If there is a still a structural need to employ a wrapper around a deal, as provided by ADB or JBIC, or someone else, then that may help lead to more capital markets based solutions. We need consensus across policy makers on how to boost the liquidity of the capital structures of these deals so they can be freely tradable and offer more value. At the end of the day in todays world, value comes from liquidity and if we can create liquidity from a policy perspective using the tools we have local currencies, inflation, wrappers, etc then we will end up with a much more sustainable model.
GL: Although increasingly Asian or local banks have provided long-term funding for infrastructure projects, such long-term assets on the book are costly to banks. We see a bunch of investors in the capital markets being willing to take on longer term investments. The question now is how we are going to attract new funds into this market.
CP: In the Philippines, our goal is to increase the proportion of bond funding in the local infrastructure market. In fact, we realized that all the ASEAN countries need to deepen their bond markets, and since individually we arent big enough weve been discussing how we can further integrate our bond markets and also conversing together about the harmonization of disclosure requirements and accounting standards. We need to set rules in place that help create an ASEAN class of financial instruments, and if we are successful in doing that it would also help all of our corporations to get access not just to bank funding but also to bond funding. The challenge is how do we deepen the regional bond market, and that comes back to my point that Asian funds and Asian capital needs to be recycled back into Asia and used here rather than fleeing elsewhere.
Another crucial component I think from an ASEAN standpoint is to have an ASEAN focused ratings agency. We have our own (Filipino) ratings firms but the ratings they provide may not always be comparable across the region, so if we are going to have an integrated bond market, its vital that we have a regional ratings agency. Thats something that Ive been pushing among ASEAN finance ministers recently, and maybe its something that Moodys can pick up and get going with.
EM: Do you think that we can create a single, pan-Asian market for infrastructure financing, where investors rights are protected, and deals are protected by a regional framework that respects the rule of law?
HW: I dont think its easy to get there with one single market easily but given time I believe this process can be done. Weve started the discussion with JBIC and the ADB, and with the IFC, but PPP, while popular in many countries across Asia, is viewed and perceived differently across the region, and that sometimes leaves investors feeling confused. But in Southeast Asia at least it would be good to have a standardized form of PPP to encourage investors to enter the market.
SL: A good example here is the US market, albeit extreme in that its one currency, one language, and one rule of law, yet its also very idiosyncratic as you have 50 states all of which are very different, with different profiles, and around that you have an umbrella or wrapper a policy view that makes it quite easy for roads and railways and hospitals to be funded in a tax efficient manner. In Asia its harder to get to but you can see the scenario where big development banks could get together and provide a consistent umbrella under which those in each country could issue for infrastructure funds and projects in their own currencies. But because the world is globalizing so quickly, and because of so many Asian currencies are so interesting to European and US investors, if we can create a framework that makes investors from those countries come in, they clearly will. That will boost liquidity and ultimately make it easier to finance local infrastructure projects and boost their value.
JC: From an equity and sponsors standpoint, that would certainly increase attractiveness. Look at where the markets have been successful in PPP terms, notably Australia and Singapore they have clearly benefited from a relatively advantageous rating, but they also have models that closely follow UK-style PFI (private finance initiative) frameworks that investors are familiar with. In Asia more broadly,you have a willing investor base and a finance base that is ready to deploy its capital and a framework thats consistent across Asia and consistent with global precedent, would facilitate this interest from international sponsors and generate a lot more interest from international capital. At the moment, it takes a long time to converse with sponsors regarding Asian opportunities as they need to familiarize themselves with the intricacies and specifics of every single market around the region.
GL: In terms of PPP, currently many deals take a long time to get done and upfront investment is high. The framework and structure need to be set in place. But once they are, and the system is standardized, I think sponsors and investors will be easily convinced.
JY: The ADB put a new PPP operational plan this month. The plan was to come out with a consistent definition on what exactly PPP means for us. So when we discuss PPPs with clients, we are able to present consistent PPP models and approaches. Sometimes, we forget that several ASEAN countries already have good experience with PPP. There is a lot of knowledge experienced and accumulated across regional governments and institutions now. It is important to harness and share it. The Philippines for instance has had two or three waves of PPP investments in recent decades. They have lots of working knowledge and experience of PPP that could be shared with the region so we dont miss this huge opportunity.
SL: It is very difficult to bridge the gap between the public and private sectors. At the end of the day the practical situation is a tremendous amount of financing needed, and a tremedous amount of long-term capital, but the mechanisms simply aren't in place yet to bring the two together efficiently.
CP: The pooling of experience is going to be helpful in terms of accelerating the learning curve among ASEAN and Asian countries. There is an infrastructure hub in Singapore, run by the World Bank and the ADB we should be working closely with that hub so that that the experience can be disseminated across other countries. We have been looking at the Indian and Indonesian models and to a certain extent the Korean model. We are exploring the possibility of creating a specialized entity that should facilitate intermediation of local funds for PPP purposes. It hasnt been launched yet, but one of the thoughts we have had is for the government to issue infrastructure funds and then come up with a mechanism allowing us to lend to projects depending on their viability. We believe this will ultimately be necessary as we build momentum in PPP. Weve launched one such project under the administration of President Benigno Aquino, and we plan to launch several more PPPs this year.
JC: The Indian market provides an interesting case given the size of the market, the historical role played by the domestic banks and the obvious need for infrastructure financing. Yet exactly at the time when further infrastructure finance is a necessity for further development, you are seeing domestic banks in India reaching sector limits. Many are becoming very constrained and at the same time youve got various capital controls limiting the ability of offshore capital to come in and bridge that gap, whether we are talking new developments or to refinance existing projects. The other opportunity weve seen is in Malaysia, where a couple of years ago the government incentivized public-sector pension funds to invest in infrastructure financing. This has been combined with the domestic rating agency, that has been able to analyze and provide ratings to assist investors in considering greenfield risk in local infrastructure projects. As a result, Malaysia has become the only in the region that is providing significant amounts of financing through the debt capital markets to greenfield infrastructure projects, which will significantly contribute to the material infrastructure spend expected under the Malaysian governments economic transformation plan.
GL: Greenfield projects certainly have higher risk profiles than brownfield or operational projects during the construction period. We could put in elements such as robust ECP (engineering, construction and procurement) contracts, liquidity support, debt reserve accounts and credit enhancements, in order to partially mitigate such risks. At the end of the day, underlying economics of the projects, along with appropriate capital and funding structure, and government commitment are keys for a successful project.
CP: In the Philippines, we are in the process of rebuilding trust of the population in the whole PPP concept. In the past we have had a chequered record. There have been some successes in water projects but there were some projects that were questioned by the public. I think we can all help each other by sharing experience and sharing risks across the public and private sectors how much subsidy should be handed to what types of projects; what are considered reasonable margins for the private sector, and so on. As everyone is suspicious about subsidies outside government, all transactions must be done in a very transparent and competitive manner so as to withstand scrutiny.
We have also done feasibility studies alongside the ADB: this is crucial for us if we are to come up with a sustainable framework so that the next Philippines government can continue the work we have started. [Our infrastructure gap] is simply too large to be completed within one administration, so our responsibility is to build up a strong legal framework and a robust project pipeline, along with strong financing mechanisms, so that the system continues to produce well-structured projects.
EM: To be fair, weve been talking about the private sector being an integral part of PPP projects for the past quarter-century, yet its never quite happened. Even the ADB in a recent paper noted that private sector funding made up only 20% of infrastructure funding. What makes us think this situation is really going to change now?
SL: The US, Canada and Australia have super-efficient infrastructure financing markets built entirely around the private sector in a very liquid format that gets extremely large-sized deals done literally on a daily basis. If you look at the next evolution of Europe Im convinced they will get themselves there, but currently they simply dont have the governmental or overlay capacity to get it done, so the private sector will have to be brought into the equation. In Asia by contrast theres a lot of liquidity, willpower, and interest, but there hasnt yet been the catalyst to force through change. Im not sure what that catalyst is, but certainly getting people around the table to discuss the problem will help. The private sector is looking for returns everywhere, and around the world we have low-yielding government bonds, and ageing populations that are looking for simple yields with very long-duration products. The sheer quantity of long-term duration needs from pension funds in the western world alone could buy all the infrastructure in Asia five times over. Its a question of how you bring that money into the system in a format thats easier. Look at the Ontario Teachers Pension Plan for instance they dont want to have to go into the details of idiosyncratic risk in all of these countries. They would like to have a mechanism to come in, in size, and fulfill the huge chunks of their portfolios that are allocated to long-dated, emerging markets-oriented infrastructure investments. Thats the gap that has to be filled.
JC: There is another point to make here that of procurement processes and consistency and transparency. We have worked hard on that in the Philippines, and you need the framework in place, but then the practicality is that when you go to the private sector, you have to go with a deal thats bankable and which has a consistent allocation of risk. If we look at the procurement process in Asia, we really need to streamline it. If we look at doing a power project in the Middle East, for instance, we do a feasibility study and an EIA (environmental impact assessment) and then approach investors, and in most cases we will get financial close inside 12 months. Compare that to Asia, where getting a power sector deal done can take three or four times as long.
CP: Its our administrations belief that we need to win back confidence in the whole process, including that of the investor community. And thats also the reason why we are shying away from unsolicited bids. The structure of unsolicited bids is really one-sided and biaised in favour of the proponent, as the proponent is the one that did the feasibility study. We believe the best way to go forward is to focus on solicited projects. The water privatization process in the Philippines (which started in 1997) is a very good model here. The IFC helped the government come up with a way of splitting the risk fairly between the public and private sectors, and the contract, now awarded many years ago, has stood the test of time. Its vital for infrastructure investment and financing in Asia that everyone governments, the public, banks, investors gains confidence in the process, and that best-practise is something that is learned across the region, helping us benchmark against each other.
JC: I think a key thing here is opening up these processes to international competition, and this arises naturally from greater transparency. You need to create an outcome that generates value-for-money, and shows how it creates value for money. That will make everyone trust the process.
HW: For me, another challenge is explaining the concept and reality of PPP to investors and the public. The first P is public and this stands not just for the sovereign country but for multilaterals and institutions like us, while the second P, the private portion, might be money coming in from foreign investors or the banking sector. And here I think when we are talking about investors we should distinguish between major-league and minor-league players. The minor-league investors and banks are usually a little more cautious, in which case we can look to convince them to get into brownfield projects. Major investors meanwhile are more likely to benefit from major greenfield infrastructure projects.
JY: In recent years the Philippines government divested its older infrastructure power investments by selling them to the private sector. These were built using funding from JBIC and ADB, along with a mix of private sector and government funds. The government was able to recycle this earlier investment to help boost investment in new infrastructure. We would like to see more brownfield as well as greenfield transactions go ahead now in the Philippines and the region. There are opportunities to attract private sector money, particularly in to brownfield projects that have no construction risk. We can expect more funds coming into the infrastructure via investments in brownfield projects.
CP: The jury is still out on our recycling of older, generational assets. The way the law was crafted is being reviewed as it doesnt allow the government to invest in power projects outside specific areas. The other challenge we are looking at is how to encourage the private sector to start greenfield projects as our power demand will continue to increase as the economy and the population continue to grow. We are in the process of reviewing this and so thats why I keep saying that knowledge sharing around the ASEAN region is so important. We are open to listen to the experience of other countries, as power infrastructure is going to be a crucial component if we are to attract manufacturing back to the Philippines. Our economy jumped straight from agriculture to services. We need to build out manufacturing if we are going to create much-needed jobs. Thats why President Aquino is so clearly focused on infrastructure. Its going to be his legacy, so its not just about rolling out projects, but about setting the right legal, structural and financial frameworks in place for the governments that succeed ours.
EM: Which projects already built, or in the pipeline, constitute the best examples of completed or pending infrastructure around Asia?
CP: I would highlight several successful projects in the Philippines. Earlier I mentioned the Metro Manila water project. When it was privatized, we split it into zones, and the upshot is a city that has both security of water supply, as well as water bills far lower than anything they had previously faced. The government did have to spend more money (than budgeted) on building the citys water infrastructure, but on the plus side, both (water utility) operators are making a profit. A decade ago, up to 70% of the citys residents werent paying their bills. One of the operators reports that this number is now down to between
10% 15%, which is creating value for everyone. Thats the ideal model, where the private sector can come in with efficiencies, and the government is relieved of the burden of running crucial and costly services and infrastructure.
HW: I agree that this project was indeed a huge success. There were concerns to begin with about it but now we can see over time how successful the project was.
JY: I remember when private consessionaires started operation in Manila, my water bill was cut by nearly half that was very impressive. The government also did a very good job managing the private operators and the process. When one operator withdrew from operation because of its financial difficulties, the government stepped in and replaced that concessionaire professionally. Despite the fact that one operator withdrew, we still have two good private operators working in Manila that are turning a profit. So ultimately this can be considered a real success story.
CP: The crucial point is that it was bidded out on a solicited basis, so even with difficulties there were no questions of wrongdoing. If we had done the bidding process with unsolicited tenders, it would not have been as successful, as the moment one of the operators got into trouble, that would have been the end of the story. And thats why I cannot overemphasize the importance of building trust in the process and of creating a system and a process that is truly transparent.
FDR: Also one example of a successful project that is still pending, is the third stage of the NAIA expressway extension in the Philippines. Originally the cost of that project meant that it wasnt approved, but then there was a creative development when an entertainment complex was planned on Roxas Boulevard. Since the owners of the complex were going to benefit from the new expressway extension, they were asked to stump up some of the investment for NAIA III, and so they are donating around PHP500 billion-600 billion. That definitely minimized the cost of the development, and as a result, the project is about to be bidded out on an open and transparent basis. This project is very important as far as the region is concerned as passengers connecting from Manila to the airport on NAIA III will go directly past and through the entertainment complex.
JC: I would highlight two deals in last 12 months. First, there was a 1,200 Megawatt power station in Vietnam last year that was the largest-ever and longest-ever infrastructure financing project in the country. It was a negotiated deal, but the Vietnam government has a number of transactions that they can benchmark against, and this was effectively a competition between different developers as to whose project gets the most attention. So you had a structure at the end where we mobilized $1.5 billion of international capital. Korean export agencies played a very central role with direct loans and guarantees. The quality of the sponsors also assisted in attracting finance to the project that benefitted from very competitive rates and a financing tenor (of 18 years). The other deal was a 1,000 Megawatt gas-fired power plant in Malaysia. The interesting aspect of that deal was that one portion of the financing was led by the domestic securities market. It also marked the first time that US-dollar financing has come into the IPP (independent power producer) market in Malaysia, facilitated by an appropriate risk allocation and bidding transparency through competition. That has opened up the process for the next round of IPP bidding, and there is now a stated intention by the Malaysian government in bringing international financing into such projects. That means that you now have global investors vying to be part of these projects, and that is both building power capacity, and introducing new and different forms of financing into the market. The Malaysian government has certainly benefited hugely from this.
SL: Its easier to do these types of projects at first on a country-to-country basis, to perfect structures as otherwise regional and other political inter-governmental dynamics dilute the initiatives. In Malaysias case, it has done a particularly good job when it comes to investing in its long-term infrastructure. The Philippines is right there too, near the head of the pack, but the combined package loans and bonds working together hasnt quite happened yet.
EM: Circling back again, Id like to point to the issue raised earlier about whether Asian money was actually being used to invest in Asian infrastructure projects. Theres clearly huge demand for investment in regional infrastructure. But to any extent are we seeing liquidity fleeing the region, due to economic concerns in both North America or due to the ongoing eurozone crisis?
JC: European banks are traditionally around 10% of the Asian markets, and at the end of the first quarter of this year, that figure was still 10%, so I dont think eurozone concerns are materially impacting liquidity in Asia when it comes to the infrastructure market. Japanese banks are liquid and active in the market; Singaporean banks are looking to take on the funding of infrastructure projects outside their traditional borders. Local and regional liquidity, if European banks pull back will more than fill the gap, and the innovation youre seeing in the infrastructure market through capital market deals and investments, and infrastructure debt funds, will ensure that if there is a delay in infrastructure development in Asia, it wont be due to retrenchment by European lenders.
CP: Infrastructure will be a crucial component of ASEAN integration going forward. We need to reduce the gap between the 10 ASEAN countries if we are to make the economic integration of the region work. Its going to be crucial if the Philippines are going to attain their goal of reducing poverty. One of the key constraints in the Philippines in the past apart from governance problems was the lack of infrastructure and thats why the key focus for our government is so squarely on boosting investment in infrastructure. And thats why, for example, when we bidded out a tollway project last year we did so on a solicited basis. We believe will be a good model for future PPP projects across the country. There are several out there right now and by end of this year I think you will see momentum in terms of further progress. But infrastructure projects are more than just about PPP. Weve increased the allocation in our budget that is focused on infrastructure investments this is yet another a sign of our Presidents commitment to create a virtuous economic cycle. Were lucky in that the financial markets have given him confidence and allowed the country to borrow at lower costs and that has freed up space in our budget. Interest costs as a fraction of budget costs have fallen to 16% last year from 21%, and we hope to continue to reduce that number. But we do need more capital markets investment and management expertise and technology in place, in order to take our infrastructure to the next level.
GL: Credit rating provides independent credit opinions which are globally comparable, and which serve as a good reference point for regional and/or global investors on project risks across different countries. Theres no doubt that ratings will play a role in bringing private sector investment and facilitating the development of capital market for infrastructure project finance around the region.
SL: It would be disingenuous of us to believe that whats going on in Europe is not going to have global implications, as at the end of day the BIS (Bank for International Settlements) within the G20 is a global construct. The ratings agencies, Moodys being one of them, is on a quest to look at the banking sector as an industry and to normalize the ratings based on the risk that you see inherent in them which includes an asset liability mismatch and a capital shortfall relative to the regulatory framework thats been imposed. That, by definition, given the magnitude of what needs to get done in Asia and everywhere else in the world is going to create change. Its a question of time, and we have a little bit of time, but if we, this part of the world in particular, want to continue growing, investment into infrastructure is going to have to continue, and its going to have to be done on a different basis than it has historically been done.JY: Liquidity has fallen off a little as a result of the eurozone crisis. And that makes it ever more important that we find new ways and means to channel capital into infrastructure investments across the region. Thats something we all need to focus on. But broadly I would say that Asia is in a very good position, and we are very optimistic that Asia can attract a lot of funding on the infrastructure side going forward. What in particular we are seeing is that governments are aware of this, and that is strong recognition that private sector investment is key to infrastructure growth. If you go around and talk to ASEAN-region leaders, everyone acknowledges that private sector investment is utterly crucial. I think that the infrastructure investment market is increasingly going to be centred in Asia, and that is going to be great for all of us.