The Milan Outer Eastern Bypass (TEEM) is not solely a large-scale project that will help revitalize the eastern section of Greater Milan. The financing structure also means it is breaking new ground in creating a new Italian investment model where the majority of funding comes from the private sector. In essence, the financial resources required to complete the project are obtained from the market.
The inclusion of TEEM on the EU’s Trans European Network-Transport (TEN-T) list not only shows the importance of the project, but also means TE’s economic and financial plan (worth €2 billion or €1.6 billion net of interest expenses) has been included in the first row of the European Commission’s table, meaning TEEM can count on EU-guaranteed project bonds. It was this recognition that led top managers at the European Investment Bank to get in touch with the company to spend three days – 26 to 28 September 2012 – and then a series of additional sessions looking at TEEM’s economic and financial architecture.
TE hopes to break ground in Italy for using European project bonds, which are innovative instruments that will enable the company to issue bonds to <long-term investors> such as insurance and pension funds. Importantly, such bonds have European Investment Bank backing and the certainty that the investment will turn into a safe, money-making investment in the future. Such project bonds open up a path for the company to get the private market funding needed to complete the infrastructure work and thus respond more rapidly to the global economic crisis without having to overcome the limitations imposed on the banking system by the Basel II and III agreements.