Project Finance Academy Module 1: Advanced Project Finance Workshop

The Advanced Project Finance Workshop forms Module 1 of the Project Finance Academy. This module will cover the core skills of risk analysis and structuring, with a special emphasis on political risk. Team case presentations neatly wrap together these skills along with the analysis and sensitivities of the team case-study Excel models. Module highlights include: Hot buttons in project finance Funding and documentation Political risk and case presentations
Day 1 Hot buttons in project finance Best sectors and project types Difficult sectors to avoid Which trends are current? Why choose project finance vs balance-sheet finance? Sponsor's rationale Lender's criteria Constructor's objectives Government's role(s) Institutions/investors Stages in project finance Time, team, costs Credit approval/information/memorandum Syndication Start case study/modelling assignments Tollway Banks/bond 144 A Power Project Bond Oil & Gas Political Risk Infrastructure Complex Bond Credit criteria Credit analysis case study Impact of leverage Calculations for global coverage ratios Calculate liquidated damages /overrun/retention requirements Credit factors How to choose sensitivities Key ratio targets Contrast to sponsors' IRR, NPV, valuation analyses How to determine the correct structure for each risk The 7 risk systems The 16 risks to identify The 81 structures to apply Operating Inputs/reserve Cost Sponsor/participant Technical Management Force majeure Legal Political Foreign exchange Infrastructure Interest/funding Syndication Market/revenues Environmental Engineering/design Completion/construction Day 2 Funding and documentation Funding sources Debt - Local currency - Cross-border - Mezzanine Credit wraps Equity - Preference capital - Convertibles - IPOs/floats for projects Capital markets. Leasing/leveraged leasng Export-credit agencies Multi-lateral agencies Commodity-based - Offtake contracts Derivatives Ratings for project financings How to get one from Moodys/Standard & Poors/Fitch Contractual architecture PPP architecture including concession agreements /BOO/BOOT Special purpose vehicles (the 6 types) Operations/management (O&M) contracts Turnkey construction contract - Delayed completion and systems performance insurances Offtake/sales contracts Support agreements/direct agreements - Indirect supports/comfort letters Government guarantees/PPP architecture Funding documentation Loan agreements Joint venture/shareholder agreement Security documentation - Assignment of contracts/insurances Offshore proceeds account Swaps Securitisation Information memorandum Due diligence How to scope the review Independence of the reviewer Fit to credit approval/compliance The “Bankable” feasibility study Role of the advisor(s) When to involve advisors How to keep the costs down Day 3 Political risk and case presentations Political risk structuring Definitions Terrorist questionnaire The classic three – expropriation; war; inconvertibility The full set of 21 political-risk categories Export-credit agencies/bilateral agencies KfW-Ipex/Hermes, Germany ECGD, UK EDC, Canada JBIC/NEXI, Japan US Eximbank OPIC, USA ECIC, SA Tactics for approaching the ECAs Multilateral agencies World bank Multilateral investment guarantee agency (MIGA) International Finance Corp (IFC) European Bank for Reconstruction & Development (EBRD) African Development Bank (AfDB) Development Bank of Southern Africa (DBSA) Africa Trade Insurance (ATI) How to approach the multilaterals Case study presentations: Each team presents its allocated case with structures and solutions as well as cashflow sensitivities. Expert feedback on the team’s presentation of the deal architecture, risks, and financial sensitivities. Project finance as a competitive tool How to integrate project financing into the bid Contract/tender bidding “Real” turnkey construction contracts PPP bidding - practical case study Croydon Tramlink, UK The ‘PPP’ Sydney model New horizons for projects and funding sources “Green” funds Emerging-market funds Tax structures Performance insurances Infrastructure/development funds Capital markets - Wraps - Partial risk - Credit guarantees Islamic project finance Credit derivatives Note the pre-course pack/CD includes the project finance risks chapter and the suite of cases and cashflow models.