Market Review 2026 — structure determines value

Infrastructure finance markets in 2026 are competitive. Lenders in the United Kingdom, Europe, the Gulf and Asia are competing for well-prepared infrastructure projects; in southern Africa, development finance institutions and regional banks are extending their pipelines as governments accelerate Public Private Partnership procurement. The firm’s view: structure determines value. The way a project is set up — who pays, and who carries which risk — decides what it is worth to a lender, and the best-prepared projects attract the most competitive terms.

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That is the firm’s position in one paragraph.

 

This review sets out the evidence behind it: what the capital markets did in the last full year for which figures exist, what is changing in the markets the firm works in, and what it means for a sponsor or an authority preparing a project now.

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The capital is there.

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Private investment in infrastructure in low- and middle-income countries reached US$100.7 billion across 315 projects in 2024, according to the World Bank’s Private Participation in Infrastructure database — 16 per cent more than the US$87.1 billion of 2023. Sub-Saharan Africa recorded US$7.9 billion across 47 projects, up 133 per cent from US$3.4 billion the year before.

 

Islamic finance, the channel through which much Gulf capital reaches infrastructure, ended 2024 with US$3.88 trillion in assets, a rise of 14.9 per cent in the year, according to the Islamic Financial Services Board. Institutional money is growing faster still: Preqin, the private-markets data provider, forecasts unlisted infrastructure assets under management of US$2.35 trillion by 2029, a compound growth rate of 10.8 per cent a year from 2023, and reports that capital raised by infrastructure funds in the first three quarters of 2025 was 70 per cent higher than a year earlier — the only private-markets asset class to pass its full-2024 total in three quarters.

 

The Global Infrastructure Hub puts the world’s infrastructure need at US$94 trillion to 2040, against US$79 trillion on current trends: a gap of US$15 trillion that lenders, funds and development institutions are being asked to fill.

Those numbers describe a market in which capital is looking for projects. They do not describe a market in which projects are easy to finance. The two statements are both true, and the distance between them is the subject of this review.

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The projects are not.

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McKinsey’s study of African infrastructure found that 80 per cent of projects fail at the feasibility and business-plan stage and that fewer than 10 per cent reach financial close — the point at which contracts are signed and money is committed — while the continent’s pipeline stood at US$2.5 trillion and international investors held up to US$550 billion that could be directed to it.

 

The failure is not of capital or of demand. It is of preparation: projects presented as engineering, with no revenue case a lender can verify, no risk allocation a lender can accept, and no model a lender can test. The same pattern holds, less starkly, in every market the firm works in. The lenders competing for well-prepared projects are competing for a small pool, and the price they offer reflects how few of those projects there are.

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What is changing, market by market.

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The United Kingdom and Europe. The United Kingdom’s Procurement Act 2023 has been in force since February 2025, and it codifies what good authorities always did: award criteria that are “clear, measurable and specific”, an assessment methodology published with the tender, and award to the tender that best satisfies the criteria under that methodology. For bidders, the matrix is now the law as well as the brief.

 

For authorities, the discipline of publishing a scoring method they must then follow places the weight of a procurement, more than ever, on the months before the documents are issued. European policy lenders remain the anchor for projects with a development objective, and their diligence standard is the one commercial lenders rely on.

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The Gulf. All seven of the Gulf’s statutory PPP regimes are now live, the federal United Arab Emirates regime since December 2023, and procurement under them is accelerating across power, water, transport, health and education. Gulf capital is deploying at home and abroad, through sovereign funds, institutional investors and Islamic banks, and it asks for documentation drafted to Islamic-finance requirements and for counterparties who understand that documentation before they arrive.

 

The firm maintains a standing opportunity register across the seven regimes, statute by statute, so that coverage begins on the first day of an engagement.

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Asia. Asian commercial banks lend competitively where a sponsor or contractor from their home market is in the project; Asian policy lenders bring infrastructure capital within bilateral frameworks, often tied to the procurement of equipment or construction. For a sponsor with the right partner, the pool can be the most competitive of the five. For a sponsor without one, it is closed.

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Southern Africa. The pipeline is widening. New oil and gas off Namibia, a deepening critical-minerals economy across the region, competition between the coastal corridors that carry its trade, and a port build-out at Walvis Bay and Lüderitz to serve all three are drawing international capital into the region at a pace not seen for some years.

 

Governments are accelerating PPP procurement, and capital — multilateral, development-finance, sovereign and commercial — is available for projects that present a bankable structure. The constraint is the one McKinsey measured: the share of projects prepared to the standard the capital requires.

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Structure determines value.

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The thread through every one of those markets is the same. A lender values a project by the cash flows it can rely on, and the cash flows a lender can rely on are decided by the project’s structure — who pays, under what contract, with what creditworthiness; who carries construction risk, demand risk, operating risk, currency risk; what happens when the asset is unavailable; how the cost of an adverse event is shared.

 

Two projects with the same engineering and different structures are worth different amounts to the same lender, and the difference is not small. It is the difference between competing term sheets and none.

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The evidence that lenders reward structure is in the default record, and the clearest part of that record is the comparison between sectors. Moody’s, the credit rating agency, studied 7,354 projects financed by bank loans between 1983 and 2018 — loans repaid mainly from the project’s own income. Across the whole sample, 5.0 per cent of projects failed to repay as agreed within ten years, on the wider count that includes every loan the bank judged unlikely to be repaid in full. For hospitals and schools, the figure was 1.1 per cent.

 

On Moody’s own stricter count, the two figures are 3.2 per cent and 0.4 per cent — an eight-fold difference. When default did occur, lenders recovered 81.5 per cent of what they were owed on average, and marginal default rates fell, by year seven, to the level of single-A rated corporate loans.

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Hospitals and schools are not safer than toll roads because of the bricks. They are safer because of the contract. Every hospital and school in Moody’s sample was paid the same way: the customer, usually a public authority, pays an agreed sum for as long as the building is open and working, and if fewer people use it than expected, the authority carries that loss, not the bank.

 

Moody’s attributes the difference in default rates to, in its words, differences in contractual arrangements, together with the phase of the credit cycle, the jurisdiction, the industry and the risks particular to each project.

 

Of those five, the one a project’s owner can write is the contract. Three things make a lender see a project as safe: payments fixed by contract; each risk placed with the party best able to carry it; and forecasts a lender can check.

 

Safer projects get better terms — a lower interest rate, a longer loan, and less of the owner’s own money required up front. Competition in 2026 should widen that difference, not close it: competing lenders reward the projects that let them see clearly what they are being asked to fund.

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A case from the firm’s work.

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Structure determining value sometimes means the structure everyone assumed is the wrong one. A transport project of about US$100 million came to the firm as a prospective PPP. The firm’s screening — strategic fit, commercial viability, financeability, delivery capacity — concluded that PPP was not the right answer for the project.

 

The firm said so, advised against PPP, and secured instead the funding route that was available: a grant and a conventional construction contract. The entry sits in the firm’s record alongside its closes because it is the same discipline: the structure was chosen to fit the capital that would fund it.

 

The engagement is anonymised; the register of transactions is available on request.

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What it means for 2026.

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For a sponsor, the market rewards preparation before approach: a revenue case a lender can verify, a risk matrix built to pass due diligence, a model built to be interrogated, and documentation prepared to the standard of each capital pool the project will approach.

 

For an authority, it rewards the work done before bidders see the documents: output specifications written to be measured, payment mechanisms that align incentive with outcome, risk allocation that survives lender review, and a scoring method published and then followed. For both, the lesson of 2026 is the one in the first paragraph. The capital is competitive. The projects are not. Structure determines value, and structure is decided in preparation.

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Sources: World Bank, Private Participation in Infrastructure Annual Report 2024. Islamic Financial Services Board, Islamic Financial Services Industry Stability Report 2025. Preqin, 2025 Global Report: Infrastructure (December 2024) and Global Reports release, December 2025. Global Infrastructure Hub, Global Infrastructure Outlook. McKinsey & Company, Solving Africa’s infrastructure paradox, March 2020. Procurement Act 2023 (UK), sections 19 and 23. Moody’s Investors Service, Default and recovery rates for project finance bank loans, 1983–2018.