Question

Discuss the historical perspective of project finance and examine its main attributes from a theoretical and practical perspective. using harvard referencing 5pages

Answer 1

Project Financing:-

Project financing is used in infrastructual related projects. It linkages to the economy are multiple and complex, because it affects production and consumption directly,creates negative and positive externalities, and involves large form of expenditure.It helps in new investment by structuring the financing around the project's own operating cash operating cash flow and assets, without additional sponsor guarantees.

Attributes:-

Lenders finance the project looking at the creditworthiness of the project, not the creditwortheness of the borrowing party.

It includes understanding the rationale for project financing , how to prepare the financial plan, asses the risk , design the financing mix,raise the funds.

Practical attributes:-

There is a hifg ratio of debt to equity, roughly project finance debt may fund 70-90% of a project's capex.

There is no gurantees from the investor in the project company.

Avoid any negative impact of a project on the credit standingof the sponsors.