PT  - JOURNAL ARTICLE
AU  - Michel Gendron
AU  - Van Son Lai
AU  - Issouf Soumaré
TI  - Project Finance with Limited Recourse
AID  - 10.3905/jsf.2007.698660
DP  - 2007 Oct 31
TA  - The Journal of Structured Finance
PG  - 97--104
VI  - 13
IP  - 3
4099  - https://pm-research.com/content/13/3/97.short
4100  - https://pm-research.com/content/13/3/97.full
AB  - Project finance has become an important method for financing large-scale, capital-intensive projects, such as power plants, oil pipelines, roads, tunnels, etc. We analyze debt capacity and risk choice in a project finance arrangement where the project's lenders have limited recourse to the sponsoring company's assets. We draw a parallel between vulnerable financial guarantee loans and project finance loans with limited recourse. Using contingent claims analysis, we illustrate the trade-offs between risk and debt capacity in those cases where the project's lenders have recourse to the sponsor's assets and in those where they do not.TOPICS: Credit risk management, project finance, volatility measures