The larger straightforward corporate transactions still account for a very large proportion of UBS's business in project finance. Notable was its selection as preferred bidder to build and operate the Channel Tunnel Rail Link, a project (the largest to be done under the UK government's private finance initiative) that will require bank debt of some £3 billion ($1.84 billion).
However, in an effort to diversify, the bank has been exploring new risks that the market hasn't addressed before. Many of these are in emerging markets. In Latin America, UBS has pioneered development of the Rule 144A project-bond market, doing three deals in this area in the past 12 months. In the Philippines, UBS was again involved in a ground-breaking transaction when it agreed to underwrite $662 million of project debt for a power plant in Quezon. The deal was the first Philippines power-purchase agreement not backed by the central government, and also has a significant component of uncovered loan not previously seen there.
UBS's appetite for political risk means that it is often the first into a market (after a great deal of consultation and research) and so seems to be reaping the higher risk/reward premiums.