Principles of Project Finance
- 2nd Edition - October 30, 2018
- Latest edition
- Author: E. R. Yescombe
- Language: English
- Hardback ISBN:9 7 8 - 0 - 1 2 - 3 9 1 0 5 8 - 5
- Paperback ISBN:9 7 8 - 0 - 1 2 - 8 0 9 9 9 3 - 3
- eBook ISBN:9 7 8 - 0 - 1 2 - 4 1 5 7 5 5 - 2
The Second Edition of this best-selling introduction for practitioners uses new material and updates to describe the changing environment for project finance. Integrating re… Read more
The Second Edition of this best-selling introduction for practitioners uses new material and updates to describe the changing environment for project finance. Integrating recent developments in credit markets with revised insights into making project finance deals, the second edition offers a balanced view of project financing by combining legal, contractual, scheduling, and other subjects. Its emphasis on concepts and techniques makes it critical for those who want to succeed in financing large projects. With extensive cross-references and a comprehensive glossary, the Second Edition presents anew a guide to the principles and practical issues that can commonly cause difficulties in commercial and financial negotiations.
- Provides a basic introduction to project finance and its relationship with other financing techniques
- Describes and explains: sources of project finance; typical commercial contracts (e.g., for construction of the project and sale of its product or services) and their effects on project-finance structures; project-finance risk assessment from the points of view of lenders, investors, and other project parties; how lenders and investors evaluate the risks and returns on a project; the rôle of the public sector in public-private partnerships and other privately-financed infrastructure projects; how all these issues are dealt with in the financing agreements
Private sector investors and lenders who intend to make project finance deals. Upper-division undergraduates and graduate students worldwide working in subjects studying the financing of large-scale single projects
List of Tables
List of Figures
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 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 Uninsured Risks and Related issues
§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
§9.15 Why Do Projects Fail?
§9.16 Loss on Default
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 Profile
§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 FUNCTIONS OF THE FINANCIAL MODEl
§13.3 Model Inputs
§13.4 Macro-Economic Assumptions
§13.5 Project Costs and Financing
§13.6 Operating Revenues and Costs
§13.7 Accounting and Taxation Issues
§13.8 Model Outputs
§13.9 Sensitivity Analysis
§13.10 The Banking Case, Base Case and Financial Close
§13.11 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 Cancellation 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 (‘MRG’)
§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
Annex: U.S. Exim ‘Project Criteria and Application Information Requirements’
Chapter 17. Recent Market Developments and 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
Index
- Edition: 2
- Latest edition
- Published: October 30, 2018
- Language: English
EY
E. R. Yescombe
E.R. Yescombe has over 30 years’ experience in various forms of structured finance, including project finance, leasing, export credits, real estate and asset finance. A former banker and head of project finance in London for a major international bank, he is now an independent consultant on project finance and public-private partnerships (PPPs), advising investors on financing for power, infrastructure and PPP projects, as well as public-sector entities on PPP policy issues, project procurement and contracting.
Affiliations and expertise
YCL Consulting Ltd., London, UKRead Principles of Project Finance on ScienceDirect