2015•Wiley Encyclopedia of ManagementRequires access
Project Financing
Reena Aggarwal, Ricardo Pereira Câmara Leal
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Abstract
Abstract Project finance is an alternative to fund power projects, transport facilities, and other infrastructure around the world, particularly in emerging markets. In project financing the cash flows of the project and its assets are directly linked to any loans or securities associated to the project. The sponsors of project finance may prefer this off‐balance sheet modality because it will not affect their credit ratings, as the credit risk of the sponsor and of the project are appraised independently. Other reasons are the, financial, legal and other advantages available only to the project, but not to the sponsors. Sponsors must carefully analyze several project specific issues involving economic, technological, political, environmental, and legal needs.