Raising finance has historically been a difficult issue in many parts of central and eastern Europe. Available local sources of finance were limited, while some international banks and investors were deterred by legal uncertainties or what they viewed as unhelpful local regimes. This situation has changed and continues to develop.

Project finance

Most countries in central and eastern Europe still rely heavily on communist-era infrastructure. They face growing pressure to upgrade and expand. Environmental issues are a particular challenge and a driver of the need to build new plants. Even with EU grants, however, the sums that will be needed are so large that various kinds of project finance will inevitably be used. And with the project finance market maturing, sponsors and financiers will seek ever more complex and sophisticated ways to develop and fund projects. New and variant forms of financing will need to be developed to meet the particular circumstances of the region.

In such circumstances, knowledge of the global markets is critical as the products and techniques developed in one jurisdiction or sector are often applied to others. Equally, innovation and creativity are essential attributes. We have been at the heart of project finance innovation and development for many years and our international project finance team advises sponsors, commercial lenders, multilaterals, export credit agencies and governmental bodies across a range of sectors.

Central and eastern Europe is not a straightforward region for project finance. Its existing legal environments are not necessarily accommodating to activities such as public private partnerships (PPP). Some projects in the region bring the challenges that come with cross-border infrastructure developments. Projects funded by EU money will also be subject to EU rules, which are usually much more stringent than those which have applied before. Nevertheless, the need for infrastructure development and renewal in eastern Europe - particularly in the fields of transport and energy - is so pressing that these difficulties must be faced and overcome.

Banking and finance

While the level of international bank lending is still relatively low, a growing number of banks in the region are now owned or partly owned by larger banks elsewhere and are making more debt available. This is good news for local companies wanting to finance their developments, as is the possible development of local capital and debt markets. Meanwhile, international investors are making more sophisticated financing structures available, such as securitisations. We have advised institutional investors, export credit agencies, international banks, regional governments, state-owned bodies and local corporates on a huge variety of financing transactions in recent years, ranging from straightforward loans and financial services to asset financing, securitisation, derivatives transactions and restructuring.

For more information please refer to the section on our global finance practice.

For further information please contact Jessica Lumby, international business development executive.

Recent deals

Our recent work includes acting for:

  • a consortium consisting of construction companies Bilfinger Berger, Porr and Swietelsky on the concession to design, build, finance and operate the section of the Hungarian M6 motorway between the M0 motorway and Dunaújváros on a public private partnership basis;
  • a consortium on the financing of the building of the Kempinski Hotel in Budapest;
  • CSA Czech Airlines on an operating lease arrangement with Babcock & Brown regarding one used B737-400 aircraft;
  • Deutsche Bank on a mortgage-backed securitisation in Hungary and Slovakia;
  • The European Bank for Reconstruction and Development (EBRD) (as principal financier) on the project financing, construction, operation and maintenance of the M1/M15 toll motorway project in Hungary, the first European toll road project financed on a genuine limited recourse basis;
  • International Finance Corporation (IFC) on the restructuring of loans involving the ministry of finance of Montenegro;
  • INA, the Croatian government-owned oil company, regarding interest rate, currency and commodity hedging;
  • Inter-American Development Bank on one of the first Hungarian Forint (HUF) bond issues following a change in the Hungarian exchange control rules;
  • Malev, the Hungarian airline, on the acquisition of a fleet of Bombardier aircraft and on its €100m European Investment Bank (EIB) financing;
  • a Motorola-led consortium (with several Polish participants) that is developing and financing a secure digital radio communications system based on terrestrial trunked radio (TETRA) standards for use by the Polish security and public safety agencies;
  • Pliva, the largest pharmaceutical company in central and eastern Europe, on its proposed Euro Commercial Paper Programme;
  • Polish Motorway Agency on the A1 toll motorway concession;
  • Thomson Multimedia, and its subsidiary Thomson Polkolor, on a synthetic lease financing arranged by JPMorgan Chase to finance, on an off-balance sheet basis, equipment located in an existing Thomson plant in Piaseczno, Poland;
  • the Bank of America National Trust and Savings Association in its proposed short-term syndicated facility to RENEL, the Romanian Electricity board;
  • Walter Bau, the leading European construction group, on the 63km Zagreb-Macelj motorway BOT project; and
  • Zagrebacka Banka on the project financing of the Istrian Highway project.

Related practices

Global finance practice

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