ASIA would need to raise about US$1,000 billion for infrastructure within the next 10 years, Standard & Poor's said yesterday, but Asian borrowers remained relatively unknown to potential Western lenders. 'We see $1,000 billion worth of capital being needed within the next 10 years,' said Brian McCullough, S&P project finance director, who will be working in the rating agency's Hong Kong office when it opens in January. Of this, about 70 per cent was power or transportation-related and 15 per cent telecommunications, he said. S&P rated almost $2,000 billion worth of corporate and public sector debt, with ratings on companies and governments in more than 50 countries. 'We see huge demands for capital,' said Leo O'Neill, president and chief rating officer with S&P. 'Investors are being attracted to the region but they don't know the credit risk as well as they know their traditional issuers,' he said. Paul Coughlin, S&P director international finance and head of the new Hong Kong office, said: 'The reality is that there are thousands of borrowers in the world. Mention Sun Hung Kai in New York and people scratch their heads.' How that $1,000 billion was to be funded needed to be sorted out, Mr McCullough said. If projects were analysed, sorted and classified, it would be easier for different lenders to become involved. Once projects were precisely defined, the source of the funding was more clearly defined. 'We've developed a mechanism which enables capital from Europe and the US to come into the region to augment the traditional providers of capital,' he said. Some projects funded by multilateral aid might qualify for commercial loans or bank financings, freeing-up the multilateral aid for other recipients. Some countries borrowing as a sovereign to fund projects might find the projects could be funded commercially, freeing-up that sovereign risk. A possible avenue for infrastructure funds could be capital markets debt financing - a break from the capital markets' traditionally conservative attitude towards higher-risk projects. In the US, the agency had rated 26 cross-border financings worth about $8.8 billion and was now looking at the rest of the world, including Asia. In the 14 months that it had been analysing cross-border financings outside the US, it had rated nine projects worth a total of $2.6 billion, Mr McCullough said. In Asia, infrastructure work had typically been funded by project financings, in which lenders accepted a higher rate of interest in return for lending to a project which might offer no recourse or limited recourse, but promised an income-generating asset such as an expressway or tollbridge when completed. Projects' life-spans were generally longer-term, and bankers shied away from long-term exposure to higher-risk lending. While debt-financings such as bond issues offered long-term funds at a fixed-rate of interest, typical bond investors had also been reluctant to invest in such projects. But S&P publication Creditweek said capital market debt financings outside the US, long a topic of conjecture by investment bankers and other market participants, was now becoming a reality and could help countries facing big infrastructure bills. 'While there is still uncertainty as to how soon it will take hold, in the long run capital markets financing will play an important role in funding power facilities and other infrastructure for investment or near-investment grade countries that have substantial needs,' it said. S&P was hosting a conference in mid-December on project financing, the first of what would be a series of meetings with the financial community, it said. S&P might have as many as 50 public ratings of Chinese and Hong Kong borrowers on its books by the end of 1995, Mr O'Neill said.