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Financing Infrastructure Projects

  • Gerald Pollio
Chapter

Abstract

In the previous chapter we saw how basic financial principles can be applied to evaluate traditional project investments. For present purposes a traditional project is defined as one in which the debt used to finance the investment, and the revenue stream to repay it, are both denominated in the same currency. The project, in other words, lacks any foreign exchange exposure. A second distinguishing feature of traditional sectors is that lenders typically require project revenues to be accumulated in an offshore deposit account, with disbursements being under their direct control. Debt service generally has a priority claim, with the remaining amounts applied first to ongoing operating or maintenance expenditures. Once pre-set debt coverage tests are met, sponsors are free to distribute the residual as dividends.

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Copyright information

© Gerald Pollio 1999

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  • Gerald Pollio

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