Project Finance (Infrastructure and Large Projects)
Target Audience
Corporate Banking (Project Finance bankers), Corporate Credit and Investment and Investment Exposure Management
Audience Level
Intermediate & Advanced
Duration
3 Days: 9am – 4pm
Delivery
Online or In-class
The programme covers a broad range of Project Finance areas including the characteristics of Project Finance, PPP and Infrastructure Projects, Pre project completion issues, Market and Operating risks in project finance, project cash flow creation and debt structuring in project finance, project cash flow modelling, technical issues in limited recourse financing, bond financing. The course will also cover the sponsor’s perspectives of project finance and dealing with Export Credit Rating agencies.
- Characteristics of Project Finance (The limitation of recourse; The due diligences required; The choice of entity as the SPV; The role of the project cash flow model; The significance of debt risk vs. commercial risk; The role of contract in limited recourse financings; The role of security in limited recourse financings.
- The rationale for selecting project finance.
- Pre-Completion (Liquidated damages; Performance bonds and retentions; Fixed price, lump sum, liquidity; Variation and change orders; Turnkey EPC structures Standard form contracts e.g., FIDIC; Completion guarantees, refinancing risk; Technology, logistics and learning curve risks.
- Market and Operating Risks (offtake agreements and the errors that often occur; Availability risk vs market risk; Take-or-pay features; Hidden recourse structures; Exclusions; The changes necessary for a Power Purchase Agreement; Implications of market volatility)
- Project Cash Flow and Debt Structuring (Risk – solvency risk vs volatility risk; Free cash flow – why is it fundamental to analysis; Cash management issues; Liquidity – creating ‘suspension’ for the special purpose vehicle; The six classifications for the management of Risk; Cash Available for Debt Service (CADS); Loan life cover, project life cover, debt service cover (LLCR and ADSCR); Surplus cash flows, lock-up, cash sweeps; Waterfall/cascade, reserve accounts; Contingency reserves; Designing structures to match cash flows; Dealing with default; The six ‘killers’ of project financings; Mortgage debentures/fixed and floating charges; Separating risk-taking and funding)
- Technical Issues in Limited Recourse Financings (The proper calculation of IRR; Insurances – pre-completion and operating phase; Assignment and cut-through agreements; The options for dealing with political risk; Environmental risks – the limitations of insurance; Currency exposures – optional approaches to structuring; Financings involving multilateral agencies – implications)
- Typical security structures in project finance
- Special considerations in extractive industry projects
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