Principles of Project Finance

(2nd edition 2014)


 

Contents 

 

 

Chapter 1 - Introduction

 

Chapter 2 - What Is Project Finance?

  §2.1 Introduction
  §2.2 Definition and Basic Characteristics
  §2.3 Development of Project Finance
  §2.4 Elements of a Project-Finance Structure
  §2.5 Examples of Project-Finance Structures
  §2.6 Why Use Project Finance?
 

Chapter 3 - Project Development and Management

  §3.1 Introduction
  §3.2 Sponsors and Other Investors
  §3.3 Project Development
  §3.4 The Rôle of Advisors
  §3.5 Joint-Venture Issues
  §3.6 The Project Company
  §3.7 Public Procurement
 

Chapter 4 - The Project-Finance Markets

  §4.1 Introduction
  §4.2 Commercial Banks
  §4.3 Bonds
  §4.4 Other Non-Bank Lenders
  §4.5 Other Sources of Private-Sector Debt
 

Chapter 5 - Working with Lenders

  §5.1 Introduction
  §5.2 Commercial Banks
  §5.3 Bonds
  §5.4 Bank Loans Versus Bonds
  §5.5 Lenders’ Due-Diligence Process and External Advisors
  §5.6 Lenders and the Public-Procurement Process
 

Chapter 6 - Types of Project Agreement

  §6.1 Introduction
  §6.2 BOT, BTO et al.
  §6.3 Offtake Contract
  §6.4 Availability-based Contract
  §6.5 Concession Agreement
  §6.6 Other ‘PPP-like’ Contracts
 

Chapter 7 - Common Aspects of Project Agreements

  §7.1 Introduction
  §7.2 Term
  §7.3 Payment Mechanism
  §7.4 Contract Monitoring by the Offtaker / Contracting Authority
  §7.5 Performance Bonding and other Guarantees
  §7.6 Compensation Events
  §7.7 Excusing Causes
  §7.8 Relief Events
  §7.9 Step-in by the Offtaker / Contracting Authority
  §7.10 Termination of the Project Agreement
  §7.11 Change of Ownership
  §7.12 Dispute Resolution
 

Chapter 8 - Sub-Contracts and other Related Agreements

  §8.1 Introduction
  §8.2 Construction Contract
  §8.3 O&M / Maintenance Contract(s)
  §8.4 Building-Services Contract
  §8.5 Fuel or other Input-Supply Contract
  §8.6 Insurance
  §8.7 Site Lease and other Usage Rights
  §8.8 Permits and other Rights
  §8.9 Amendments to and Replacement of Sub-Contracts
  §8.10 Parent-Company Guarantees
  §8.11 Direct Agreements
 

Chapter 9 - Commercial Risks

  §9.1 Introduction
  §9.2 Risk Evaluation and Allocation
  §9.3 Analysis of Commercial Risks
  §9.4 Commercial Viability
  §9.5 Construction Risks
  §9.6 Revenue Risks
  §9.7 Operating Risks
  §9.8 Input-Supply Risks
  §9.9 Force Majeure
  §9.10 Environmental Risks
  §9.11 Residual-Value Risk
  §9.12 Contract Mismatch
  §9.13 Recourse to the Sponsors
  §9.14 Risks for an Offtaker / Contracting Authority
 

Chapter 10 - Macro-Economic Risks

  §10.1 Introduction
  §10.2 The Time Value of Money
  §10.3 Interest-Rate Risks
  §10.4 Inflation
  §10.5 Foreign-Exchange Risks
  §10.6 Refinancing Risk
 

Chapter 11 - Regulatory and Political Risks

  §11.1 Introduction
  §11.2 Projects and Politics
  §11.3 Change in Law
  §11.4 Investment Risks
  §11.5 Wider Political Risks
  §11.6 ‘Sub-Sovereign’ Risk
  §11.7 Government Support Agreement
  §11.8 Political-Risk Insurance and Guarantees
 

Chapter 12 - Financial Structuring

  §12.1 Introduction
  §12.2 Investors’ Analysis and Equity Structure
  §12.3 Debt Cover Ratios
  §12.4 Debt:Equity Ratio
  §12.5 Debt Service
  §12.6 Interest Rate and Fees
  §12.7 Additional Costs
  §12.8 Optimizing the Financial Structure
 

Chapter 13 - The Financial Model

  §13.1 Introduction
  §13.2 Model Inputs
  §13.3 Macro-economic Assumptions
  §13.4 Project Costs and Financing
  §13.5 Operating Revenues and Costs
  §13.6 Accounting and Taxation Issues
  §13.7 Model Outputs
  §13.8 Sensitivity Analysis
  §13.9 The Base Case & Financial Close
  §13.10 Using the Model after Financial Close
 

Chapter 14 Project-Finance Loan Documentation

  §14.1 Introduction
  §14.2 Lenders’ Term Sheet
  §14.3 Construction Phase—Drawdown of Debt
  §14.4 Operating Phase—Control of Cash Flow
  §14.5 Reporting Requirements
  §14.6 Debt Reduction and Prepayment
  §14.7 Lenders’ Security
  §14.8 Conditions Precedent
  §14.9 Representations and Warranties
  §14.10 Covenants
  §14.11 Permissions, Waivers and Amendments
  §14.12 Events of Default
  §14.13 Lenders’ Decision-Making Process
  §14.14 Intercreditor Issues
  §14.15 Governing Law and Jurisdiction
  §14.16 Debt Refinancing
  §14.17 Secondary Equity Sale
 

Chapter 15 - Public-Sector Financial Support

  §15.1 Introduction
  §15.2 Indirect Public-Sector Financial Support
  §15.3 Direct Public-Sector Financial Support
  §15.4 Mezzanine Debt
  §15.5 Standby Financing
  §15.6 Refinancing after Project Completion
  §15.7 Gap Financing
  §15.8 Policy Banks
  §15.9 Credit Guarantee Finance
  §15.10 Capital Grant
  §15.11 Viability-Gap Funding
  §15.12 Part-Construction of the Project
  §15.13 Complementary Investment
  §15.14 Full Debt Guarantee
  §15.15 First-Loss Debt Guarantee
  §15.16 Pari-Passu Debt Guarantee
  §15.17 Debt Underpinning
  §15.18 Minimum Revenue Guarantee
  §15.19 Tariff Subsidy
  §15.20 Public-Sector Project Company
  §15.21 Guarantee Funds
 

Chapter 16 - Export-Credit Agencies and Development-Finance Institutions

  §16.1 Introduction
  §16.2 Export Credit Agencies
  §16.3 Political-Risk Insurance for Investors
  §16.4 ECAs and Bilateral DFIs
  §16.5 Multilateral Development-Finance Institutions
 

Chapter 17 - Recent Market Developments & Prospects for Project Finance

  §17.1 Introduction
  §17.2 The Effect of the 2008 Financial Crisis
  §17.3 The ‘Basel Process’
  §17.4 Non-Bank Lenders
  §17.5 Improving Project-Finance Credit Risk
  §17.6 New Models
  §17.7 The Future of Project Finance
 

Glossary and Abbreviations

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