TABLE OF CONTENTS This chapter covers the procedures for raising project finance from private-sector lenders, in particular commercial banks (cf. 5.1) and bond investors (cf. 5.2), with a comparison between the two (cf. 5.3).
The financing and additional credit support that can be obtained from public-sector sources, in particular export credit agencies (such as U.S. EximBank) and multilateral development banks (such as the World Bank) are discussed in Chapter 11.
The nature and roles of the various external advisers used by lenders are also considered (cf. 5.4).
Most commercial banks in the project finance field have specialist departments that work on putting project finance deals together. There are three main approaches to organizing such departments:
Project finance department. The longest standing approach is to have a department purely specializing in project finance transactions. Larger departments are divided into industry teams, covering sectors such as energy, infrastructure, and telecommunications. Concentrating all the project finance expertise in one department ensures an efficient use of resources and good cross-fertilization, using experience of project finance for different industries; however, it may not offer clients the best range of services.
Structured finance department. As mentioned in 2.4, the divisions between project finance and other types of structured finance are becoming increasingly blurred, and therefore project finance often forms part of a larger structured finance operation. Again there may be a division into industry teams. This approach may offer a more sophisticated range of products, but there is some danger that project finance may not fit easily into the...
