A DSCR below 1.0 means the project cannot cover its debt. Lenders usually require a DSCR buffer (e.g., 1.20x to 1.40x) depending on project risk. 2. Loan Life Coverage Ratio (LLCR)
[Analyze Project Phase] ➔ Dev / Construction / Operation ↓ [Identify Risk Type] ➔ Financial / Political / Technical ↓ [Determine Mechanism] ➔ SPV Clause / EPC Contract / Government Guarantee
: How the SPV interacts with its lenders to secure multi-billion dollar funding. Week 3: Risk Analysis & Taxonomy Pre-Completion Risks : Construction delays and cost overruns. Post-Completion Risks : Operational issues, demand risk, and political stability. Risk Allocation : The preliminary step before any deal is signed. Week 4: Capital Budgeting & Cash Flows Construction Phase : Analyzing the sources and uses of funds during the build. Operational Phase A DSCR below 1
The University will provide an in-depth look at major global infrastructure projects (like roads, bridges, power plants, broadband networks) and investigate why private investors are becoming an essential part of the equation. The estimates are quite staggering: the OECD projects that the total global infrastructure investment requirement by 2030 could reach $71 trillion.
: Project finance isn't just one loan; it's a web of project and financial contracts designed to allocate risk to the party best equipped to handle it. Week 2: The Syndicate & Lenders Syndicate Roles Loan Life Coverage Ratio (LLCR) [Analyze Project Phase]
Because debt is cheaper than equity (leverage effect) Rationale: If you can borrow at 5% and the project makes 10%, the equity owner captures the extra 5% on the leveraged portion, amplifying returns.
Borne primarily by the government hosting the project. Risk Allocation : The preliminary step before any
Use project financing to realize public works that are self-sustaining with limited public investment.
: The questions will be integrated into a case study and may look like: