book

Project Finance in Theory and Practice, 2nd Edition

by Stefano Gatti

August 2012

Beginner

496 pages

16h 52m

English

Academic Press

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Introduction1.1 What is Project Finance?1.2 Why Do Sponsors Use Project Finance?1.3 Who Are the Sponsors of a Project Finance Deal?1.4 Overview of the Features of Project Finance1.5 The Theory of Project Finance

Introduction2.1 Historical Evolution of Project Finance and Market Segments2.2 The Global Project Finance Market2.3 The Evolution of the PPP Market
Introduction3.1 Identifying Project Risks3.2 Risk Allocation with Contracts Stipulated by the SPV3.3 Summary of the Risk Management Process
Introduction4.1 The Role of Legal Advisors in Project Finance Deals4.2 The Role of the Independent Engineer in Project Finance Deals4.3 The Role of Insurance Advisors and Insurance Companies in Project Finance Deals
Introduction5.1 Analysis of Operating Cash Flows and Their Behavior in Different Project Life Cycle Phases5.2 Defining the Optimal Capital Structure for the Deal5.3 Cover Ratios5.4 Sensitivity Analysis and Scenario Analysis
Introduction6.1 Advisory and Arranging Activities for Project Finance Funding6.2 Other Roles in Syndicated Loans6.3 Fee Structure6.4 International Financial Institutions and Multilateral Banks6.5 Bilateral Agencies: Developmental Agencies and Export Credit Agencies (ECAs)6.6 Other Financial Intermediaries Involved in Project Finance6.7 Funding Options: Equity6.8 Funding Options: Mezzanine Financing and Subordinated Debt6.9 Funding Options: Senior Debt6.10 Project Leasing6.11 Project Bonds
Introduction7.1 The Project Company7.2 The Contract Structure7.3 Refinancing Project Finance Deals
Introduction8.1 The Basel Committee’s Position on Structured Finance Transactions (Specialized Lending)8.2 Rating Criteria for Specialized Lending and Their Application to Project Finance8.3 Rating Grade Slotting Criteria of the Basel Committee and Rating Agency Practices8.4 The Basel Accord and the Treatment of Credit Risk for Project Finance Loans: Is Project Finance More Risky Than Corporate Loans?8.5 Empirical Studies on Project Finance Defaults and Recovery Rates8.6 Introduction to the Concepts of Expected Loss, Unexpected Loss, and Value at Risk8.7 Defining Default for Project Finance Deals8.8 Modeling the Project Cash Flows8.9 Estimating Value at Risk through Simulations8.10 Defining Project Value in the Event of Default
IntroductionA1 Breakdown of the Financial Model

Overview

This book presents comprehensive coverage of project finance in Europe and North America. The Second Edition features two new case studies, all new pedagogical supplements including end-of-chapter questions and answers, and insights into the recent market downturn. The author provides a complete description of the ways a project finance deal can be organized—from industrial, legal, and financial standpoints—and the alternatives available for funding it. After reviewing recent advances in project finance theory, he provides illustrations and case studies. At key points Gatti brings in other project finance experts who share their specialized knowledge on the legal issues and the role of advisors in project finance deals.

*Forword by William Megginson, Professor and Rainbolt Chair in Finance, Price College of Business, The University of Oklahoma

*Comprehensive coverage of theory and practice of project finance as it is practiced today in Europe and North America

*Website contains interactive spreadsheets so that readers can input data and run and compare various scenarios, including up to the minute treatment of the cutting-edge areas of PPPs and the new problems raised by Basel II related to credit risk measurement