Specialised Forms of Lending
This phrase describes loans where the main or only source of repayment is the project being financed, in which banks consider two separate types of risk — pre completion and post completion. The post completion risk is analagous to the risk of lending to a one product company, except that there is no historical record and market analysis is more speculative since production will not start for several years. Before that point, however, the bank has to consider the risk that the project will never be completed.
KeywordsCash Flow Balance Sheet Debt Service Cost Overrun Firm Buyer
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