Principles of Project Finance

1st Edition

Authors: E. R. Yescombe
Print ISBN: 9781493302192
eBook ISBN: 9780080514826
Imprint: Academic Press
Published Date: 6th June 2002
Page Count: 344
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This introduction for practitioners offers a balanced view of project financing, integrating legal, contractual, scheduling, and other areas that participate in large multiparty projects, large single-asset purchases, and broad-based financing programs for fleets of assets. It mixes theories and case studies but avoids becoming too oriented toward applications in any one particular industry. It focuses on the concepts and techniques required by project finance people without being overly academic or beset by case studies. The author, who has a legal background, recognizes that some legal information is necessary, but he doesn't attempt to write a law book.

Project Finance refers to the techniques of financing projects which are dependent on cash flows for repayment, as defined by the contractual relationships within each project. By their very nature, these types of projects rely on a large number of integrated contractual arrangements for successful completion and operation. Project finance is an element within the larger field of project management. Many organizations around the world utilize project management to enable innovative processes, to plan, organize, and control strategic initiatives, to monitor enterprise performance, to analyze significant deviations, and to forecast their impact on the organization and project(s). Project management can be found in many industries today, from construction and information systems to healthcare, financial services, education, and training.

Key Features

@introbul:Key Features: @bul:-A comprehensive and authoritative guide to the theory and practice of project finance. -An international scope, covering projects in both the developed and developing worlds. -The book describes and explains: -Sources of project finance. -Typical commercial contracts (such as those for construction of the project and sale of its product or services) and their impact on the project finance structure. -Project finance risk assessment from the points of view of lenders, investors, and other project parties. -Structuring the project finance debt. -The key issues in negotiating a project finance debt facility. -Extensive glossary and cross-referencing. -No prior knowledge of project finance or financing techniques is assumed.


Professionals (bankers, members of various financial institutions-venture capital, the capital markets, international fund groups-as well as attorneys, various government regulators, and project finance professionals) who want a broad, high-level overview of project finance concepts and techniques. Graduate students and students enrolled in post-graduate or professional-level private courses on project financing.

Table of Contents

Chapter 1: Introduction Chapter 2: What is Project Finance? §2.1 Development of project finance §2.2 Features of project finance §2.3 Project finance and privatisation §2.4 Project finance and structured finance §2.5 Why use project finance? Chapter 3: The Project Finance Markets §3.1 Commercial banks §3.1.1 Areas of activity §3.1.2 Banks in the market §3.2 Bond issues §3.3 Mezzanine and subordinated debt §3.4 Lease finance §3.5 Vendor finance §3.6 Public sector debt Chapter 4: Project Development and Management §4.1 Sponsors and other investors §4.2 Project development §4.3 The rôle of advisers §4.4 Joint venture issues §4.5 The Project Company §4.5.1 Structure §4.5.2 Shareholder agreement §4.5.3 Management and operations §4.6 Public procurement §4.6.1 Pre-qualification §4.6.2 Request for proposals §4.6.3 Bid negotiation to contract signing §4.6.4 Competitive bidding for other Project Contracts Chapter 5: Working with Lenders §5.1 Commercial banks §5.1.2 Advisers and Lead Managers §5.1.3 Letters of intent §5.1.4 Lenders and the public procurement process §5.1.5 Bank rôles §5.1.6 Financial model §5.1.7 Term sheet, underwriting and documentation §5.1.8 Information memorandum and syndication §5.1.9 Agency operation §5.2 Bond issues §5.2.1 The investment bank and the ratings agencies §5.2.2 Rule 144a §5.2.3 Wrapped bonds §5.2.4 Bond paying agents and trustees §5.3 Loans v. bonds


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© Academic Press 2002
Academic Press
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About the Author

E. R. Yescombe

E.R. Yescombe is an independent consultant on project finance and public-private partnerships (PPPs), advising investors on financing for power, infrastructure and PPP projects, as well as public-sector entities on PPP policy issues, project procurement and contracting.

Affiliations and Expertise

YCL Consulting, London UK. Edward Yescombe is an expert in project finance, leasing, export credits, real estate finance, and asset finance.


@qu:"This book provides a comprehensive treatment of project finance accessible to those less familiar with the subject matter yet detailed enough to serve as a valuable reference for the experienced manager. The book covers a wide array of topics from legal issues to valuation methods, and even hedging financial risk with financial derivatives. Given the increasing importance of project finance in Asia and the Pacific Rim, Principles of Project Finance, will be an invaluable reference for academics and managers alike in this region." @source:--Nobuya Takezawa, International Christian University, Tokyo, Japan @sp: @qu:"This is an authoritative work written by a distinguished practitioner. I have no doubt it will quickly become a key text for those in both public or private sectors whose work involves Project Finance." @source:--Michael Gerrard, Head of Public Private Partnerships, Partnerships UK plc