Introduction to Project Finance (eBook)

Andrew Fight (Autor)

eBook Download: PDF

2005 | 1. Auflage
208 Seiten
Elsevier Science (Verlag)
978-0-08-045468-9 (ISBN)

Infos

The term project finance is now being used in almost every language in every part of the world. It is the solution to infrastructure, public and private venture capital needs. It has been successfully used in the past to raise trillions of dollars of capital and promises to continue to be one of the major financing techniques for capital projects in both developed and developing countries.

Project Finance aims to provide:
*Overview of project finance
*Understanding of the key risks involved in project finance and techniques for mitigating risk
*Techniques for effective evaluation of project finance from both a financial and credit perspective

The author differentiates between recourse and non-recourse funding, tackles the issues of feasibility, identifies the parties normally involved with project finance plans, and details techniques for realistic cash flow preparation.

*Inspired by basic entry level training courses that have been developed by major international banks worldwide
*Will enable students, and those already in the finance profession, to gain an understanding of the basic information and principles of project finance
*Includes questions with answers, study topics, practical 'real world' examples and an extensive bibliography

---

The term "e;project finance"e; is now being used in almost every language in every part of the world. It is the solution to infrastructure, public and private venture capital needs. It has been successfully used in the past to raise trillions of dollars of capital and promises to continue to be one of the major financing techniques for capital projects in both developed and developing countries.Project Finance aims to provide: *Overview of project finance*Understanding of the key risks involved in project finance and techniques for mitigating risk*Techniques for effective evaluation of project finance from both a financial and credit perspectiveThe author differentiates between recourse and non-recourse funding, tackles the issues of feasibility, identifies the parties normally involved with project finance plans, and details techniques for realistic cash flow preparation.*Inspired by basic entry level training courses that have been developed by major international banks worldwide*Will enable students, and those already in the finance profession, to gain an understanding of the basic information and principles of project finance*Includes questions with answers, study topics, practical 'real world' examples and an extensive bibliography

Inhalt

Cover 1
Introduction to Project Finance 4
Contents 6
Preface 8
1 Overview of project finance 10
Introduction to project finance 10
Uses for project finance 11
Why use project financing 12
Non-recourse/limited recourse 12
Advantages of project finance 13
Disadvantages of project finance 15
Common misconceptions about project finance 16
Description of a typical project finance transaction 17
Project phases 20
Parties to a project financing 20
Project company 20
Sponsor 21
Borrower 21
Financial adviser 21
The lenders 22
Technical adviser 24
Lawyers 24
Equity investors 24
Construction company 27
Regulatory agencies 27
Export credit agencies 28
United States Export–Import Bank 28
Ministry of Economy Trade and Industry (Japan) 29
Export–Import Bank of Japan 29
Export Credits Guarantee Department 29
Compagnie Française d’Assurances Commerciale Exterieure 30
Export Development Corporation of Canada 31
Other OCED government insurance entities 31
Commercial insurance 31
Multilateral agencies/development banks 33
European Bank for Reconstruction and Development (EBRD) 33
World Bank 34
International Finance Corporation 36
Multilateral Investment Guarantee Agency 36
Regional development banks 37
Host governments 39
Construction contractors 39
Suppliers 40
Purchasers 40
Leasing companies 40
Insurers 40
Financing sources used in project financing 41
Equity 41
Developmental loan 42
Subordinated loans 42
Senior debt 43
Unsecured loans 43
Secured loans 44
Syndicated loans 45
World Bank group financing sources 47
Export credit agencies 49
Bonds 49
Advantages of bonds 50
Disadvantages of bonds 50
Investment funds 51
Institutional lenders 51
Leasing companies 51
Vendor financing of equipment 51
Contractors 51
Sponsors 52
Supplier financing 52
Host government 52
2 Understanding key project risks 54
Entity risks 54
Sponsor 54
Construction lender 55
Permanent lender 55
Contractor 56
Operator 56
Supplier 57
Off-taker/purchaser 57
Host government 57
Other governments 58
Equity investor 58
Multilateral and bilateral agencies 58
Transaction risks 59
Preliminary risk assessment 59
Feasibility studies 59
Due diligence 60
Risk periods 60
Engineering and construction phase risks 60
Start-up risks 63
Operational risks 63
Financial risks 65
Country/political risks 66
Legal risks 68
Environmental, regulatory and approval risks 69
Refinancing risk 70
Force majeure 71
Lender liability risk 71
Mitigating and managing project risks 73
Construction and completion risks 73
Operational risks 74
Financial risks 77
Political risks 77
The joint venture 79
Guarantees 80
Security 82
Reasons for taking security 83
Security over specific tangible assets 83
Negative pledge 84
Security trusts 84
Formalities 86
Insurance issues 86
Role of project insurance 86
Types of insurance 86
Scope of cover 88
Problem areas 88
Performance and payment bonds 89
Reinsurance 89
3 Evaluating the project 90
The offering memorandum 90
Legislation relating to information memoranda 92
Information memorandum issues 96
Cash flow 104
Financial ratios 106
Liquidity ratios 107
Debt ratios 109
Coverage ratios 109
Sensitivity analysis 110
Housing development cash flow sensitivity analysis 113
Credit risk appraisal: general considerations 117
Pre-construction 117
Post-construction 117
Financial strength 119
4 Contractual framework 121
General 121
Pre-development agreements 121
Construction agreements 122
Contractors bonds 123
Operating and maintenance agreements 124
Sponsor support agreements 125
Management agreements 125
Representations and warranties 126
Project loan/credit agreements 127
Credit agreements – basic terms 128
Significant provisions of the project finance credit agreement 129
Covenants 130
The games borrowers play 131
Functions of loan covenants 133
Drawbacks to loan covenants 133
Guidelines for efficient covenanting 134
Types of covenants 135
Events of default 135
Project financing covenants 136
NPVs and cover ratios 140
Control accounts 141
Events of default 142
Conditions precedent to closing 144
Intercreditor agreement 145
Security agreements 146
Lenders’ security concerns 146
Security documents 146
Security on specific tangible assets 146
5 Project financing in the economy 148
Project financing and the privatization agenda 148
Project finance tables 154
The UK PFI model 154
Appendices 160
Appendix 1: Generally accepted risk principles risk map 160
Appendix 2: Credit rating agency rating scales 162
Appendix 3: Country risk criteria 165
Political risk profile 165
Economic risk profile 165
S& P’s sovereign rating profile
Appendix 4: World Bank country categories 175
Glossary 184
A 184
B 185
C 187
D 190
E 191
F 193
G 194
H 195
I 195
J 196
L 196
M 198
N 199
O 199
P 199
R 201
S 203
T 204
U 205
W 205
Y 205
Z 205
Suggested reading 206
Publications 206
Books 206
Index 208
A 208
B 208
C 208
D 209
E 210
F 210
G 210
H 211
I 211
J 211
K 211
L 211
M 211
N 212
O 212
P 212
Q 213
R 213
S 213
T 214
U 214
V 214
W 214

Produkt-Details

• Erscheint lt. Verlag: 26.8.2005
• Sprache: englisch
• Themenwelt: Sachbuch/Ratgeber
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung
• Themenwelt: Betriebswirtschaft / Management ► Spezielle Betriebswirtschaftslehre ► Bankbetriebslehre
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Unternehmensführung / Management
• ISBN-10: 0-08-045468-2 / 0080454682
• ISBN-13: 978-0-08-045468-9 / 9780080454689