This article requires a subscription to view the full text. If you have a subscription you may use the login form below to view the article. Access to this article can also be purchased.
Abstract
The general objectives of subordinated debt in project finance transactions are to mitigate risk for senior lenders and to mobilize a higher aggregate level of project debt than is otherwise justified by the project's underlying cash flows. This article focuses primarily on three purposes of debt subordination in project finance, 1) replacement by project sponsor or other “insider” of equity with debt, 2) provision by other “investors” of equity-like capital on a hybrid basis, and 3) promoting the participation of senior lenders by improving the margin of debt service coverage.
- © 2001 Pageant Media Ltd