TY - JOUR T1 - An Analytical Framework for Partial Government<br/>Guarantees of Project Finance Loans JF - The Journal of Structured Finance SP - 77 LP - 82 DO - 10.3905/jsf.2011.16.4.077 VL - 16 IS - 4 AU - John Ryan Y1 - 2011/01/31 UR - https://pm-research.com/content/16/4/77.abstract N2 - The recent credit crisis prompted the creation of several loan guarantee programs by governments wishing to support continued project finance lending to policy-oriented sectors, including infrastructure and renewable energy. Now that the credit crisis has apparently abated, do such guarantee programs serve any purpose? If project finance lenders are willing to lend to an investment-grade project on relatively reasonable terms of tenor, pricing, and covenants, does an unconditional government guarantee of the project’s loan provide any “additionality” (e.g., an outcome that would not have occurred without the guarantee) that is desirable from a policy perspective? This article examines several concepts that might be useful in answering this complex policy question, including a possible source of additionality for commercially financeable projects from a partial sovereign loan guarantee, the cost to the government of a guarantee (especially in connection with the substitution of financial institution capital allocation), and the comparison of a partial government guarantee to the equivalent subsidy for a project.TOPICS: Project finance, legal and regulatory issues for structured finance ER -