PT  - JOURNAL ARTICLE
AU  - Henry Hsiao
TI  - The Use of Financial Guarantees and Contingent Capital in Project Finance
AID  - 10.3905/jsf.2001.320240
DP  - 2001 Apr 30
TA  - The Journal of Structured Finance
PG  - 19--23
VI  - 7
IP  - 1
4099  - https://pm-research.com/content/7/1/19.short
4100  - https://pm-research.com/content/7/1/19.full
AB  - Insurers or reinsurers can provide nonrecourse or limited-recourse structures to enhance a project's creditworthiness. These solutions can benefit lenders as well as sponsors. By providing broad credit support in the form of financial guarantees or by carving out risks in the form of contingent capital using defined triggers, insurers or reinsurers can help enhance a project debt rating from below investment grade to investment grade. Such enhancement makes the transaction more attractive to the market. This article focuses on financial guarantees and contingent capital solutions, comparing benefits, pricing elements, and other features of these two solutions.