The European Investment Bank has agreed to support construction of the new 12km long A11 motorway link between Brugge and Westkapelle in Belgium. Once complete the A11 will provide a direct motorway connection between the port of Zeebrugge and the European motorway network. The A11 is both the first transport project and the first greenfield PPP in Europe to benefit from the EC-EIB Project Bond Initiative.

The existing road is heavily congested and delays access by both freight traffic to Zeebrugge and those accessing the Belgian coast. It is expected that the regional economy will benefit from increased tourism along the West Flanders coast once the A11 is complete.

The A11 motorway scheme will be financed using the project bond credit enhancement model. EUR 578 million (US$ 661 million) of project bonds have been issued for the A11 and the European Investment Bank is also  providing a subordinated credit facility of EUR 115 million (US$ 131.70 million), which improved the credit rating of the bonds by three notches to A3 according to rating agency Moody’s. In addition, the EIB has acted as an anchor investor for EUR 145 million (US$ 165.90 million) of the bond issue.

The A11 scheme is the third infrastructure project in recent months to be financed under the Project Bond Initiative, jointly developed by the European Commission and European Investment Bank. Successful placement of the 32 year bond has demonstrated how institutional investors can help finance greenfield infrastructure and PPP projects. The transaction also has important innovative features, such as committed financing and a deferred drawdown structure which matches construction requirements.

Use of the EIB project bond credit enhancement instrument, through a letter of credit representing 20% of senior debt, enhanced the rating from Baa3 to A3.

A public-private consortium of Via Brugge and Via Invest will finance the design-build-finance-maintain project through the project company Via A11. Via Invest is a joint-venture between Belgian government owned investment company PMV and the Community of Flanders. Via Brugge comprises the infrastructure fund DG Infra, Jan De Nul NV (39%) and a number of other construction companies active in the Benelux region (Aswebo, Aclagro, Franki Construct and Van Laere) holding a total 11%.

Construction of the A11 motorway is expected to last four years.