Visiting Lectures

Project Finance

Donor

Japan Bank for International Cooperation (JBIC)

Overview

Project finance is a financing structure used primarily for long-term infrastructure and industrial projects in which repayments for the loan issued to finance a project are made, in principle, exclusively from the cash flow generated by the project, and security for the loan is limited to the project's assets (including certain rights and interests in relation to the project). As a project finance transaction involves many participants and requires the preparation of a diverse set of contracts, the negotiation process is typically complicated.

Due largely to reductions in government funding as well as increased involvement by the private sector in infrastructure projects, there has been remarkable progress in the development of this practice area.

This course will initially cover the fundamental concepts and elements of a cross-border transaction, and will later address some of the basic characteristics of and issues related to project finance including, among other topics, risk analysis and mitigation, finance structuring and cash flow[ projection], and documentation related
issues.

Finally, we will review certain actual project finance transactions. The goal of this course is to provide a basic understanding of the following: (1) large-scale natural resource and infrastructure projects and the various financing methods that may be implemented for those projects, (2) the concept of project finance and the roles of the various participants in a project finance transaction, (3) the calculation method to determine both debt service coverage ratio (DSCR) and debt-to-equity ratio, (4) risk allocation and classification of risks in project finance transactions, (5) the reasons why security interests are granted in project finance transactions and the concept of step-in rights, (6) recent project finance related trends and challenges.

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