Is debt replacing equity in regulated privatised infrastructure in LDCs?

The main purpose of this paper is to describe the evolution of the financing structure of regulated privatised utilities and transport companies. To do so, we rely on a sample of 121 utilities distributed over 16 countries, of 23 transport infrastructure operators and 23 transport services operators distributed over 23 countries. The paper shows that leverage rates vary significantly across sectors with the highest rates observed in transport and the lowest in water. Moreover, the paper also shows that the 1997 Asia crisis lead operators to adjust their financial structure differently in different regions. Overall, the evidence presented here shows that debt is replacing equity in the financing of the investment needs of utilities and transport services in developing countries. These results raise some questions as to whether the regulator's mandate should be expanded to monitor the financial structure of companies and as to whether a stronger commitment by the international community to more transparent regulatory accounting systems.