The effect of government support upon the project financing credit structure for infrastructure projects

TL;DRAbstract

Project Financing has been used since the 12th century, however, in recent times it has been used for the provision of infrastructure facilities, such as power stations, water treatment plants, and toll roads and tunnels. Project Financing involves the arrangement of debt, equity and credit enhancement to finance an facility, in which the lender looks primarily at the project's cash flow for loan repayment and the assets for collateral. The loan can be undertaken on either a non-recourse or limited recourse basis, which enables the sponsor to take the loan 'off the balance sheet'.A thorough understanding and appraisal of the project economics and risks involved are fundamental to the success or failure of a project: A sponsor of an infrastructure project will firstly attempt to transfer as many of the project risks onto the government. However, if this is unsuccessful, the sponsor may look to the market or structure the financing to transfer or minimise these risks. A review of the the

Chat with Paper

AI Agents for this Paper