Articles:

PROJECT FINANCE: Incentives and Governance

Articles

Jan 13, 2014 — Neil Boyle

The traditional financial engineering risk-return approach to PPP infrastructure finance goes far but not far enough.  PPPs are often financed with high or even aggressive debt/equity ratios ranging from 80:20 and occasionally reaching the mid 90s.  TCE/NIE tells us that the principals of infrastructure projects are typically bilaterally dependent due to ...

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UPDATED – TCE PRECEPTS FOR ANALYZING INSTITUTIONS

Jul 19, 2010 — Neil Boyle

UPDATED - TCE PRECEPTS FOR ANALYZING INSTITUTIONS 07-19-2010 ver 3C Please click on the above link to see the updated version of what I consider one of my important posts.  It is important because it concentrates in one file the beginning of what I have learned over the past 10 years of studying ...

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Project Finance: Incentives and Governance of the Deal

Dec 29, 2009 — Neil Boyle

BACKGROUND  The traditional approach to PPP infrastructure finance comes from a financial engineering risk-return paradigm. PPPs are often financed with high or even aggressive debt/equity ratios ranging from 80:20 and occasionally reaching the mid 90s. As a minimum condition for lending, creditors require that project cash flows be extraordinarily stable and resilient ...

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Transaction Complexity Overtaking the Institutional Capacities of the State

Case Studies

Dec 15, 2009 — Neil Boyle

Case study (2007)  THE AIRPORT, a BOT to build and operate an international airport in an unnamed Country is an example of transaction complexity overtaking the capacities of the institutions meant to enable them. Transaction complexity came in three forms: the narrow dividing line between private ordering and corruption; an insensitive ...

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Negotiating the Deal for Governance Closure

Technical Notes

Nov 24, 2009 — Neil Boyle

The missing ingredients in PPP projects are the following: (i) pricing out of unrelieved contract hazards; (ii)agreements that signal confidence and continuity intentions of the parties; (iii) agreement and protocol to cost share unanticipated risks; and (iv) investments by government in transaction-specific assets at the forward stage to signal: (a) ...

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Pricing Out the Unrelieved Contract Hazards

Technical Notes

Nov 24, 2009 — Neil Boyle

Negotiations of the financial closure kind are often incomplete in PPP infrastructure deals; typically financial closure is considered the last step in deal-making. Incompleteness is due less to inadequate risk identification procedures and efforts than to the existence of different identification procedures altogether. Differences are between the firm as production ...

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Pricing the Deal as a Quadruple Trade-off

Nov 21, 2009 — Neil Boyle

The pricing of deals is often a two dimensional (finance on technical) trade-off between price and a series of financial and technical considerations. Because these considerations are geared toward securing project revenue streams (cash flows) for the comfort of creditors, finance issues tend to dominate the contracting action. Securing lender comfort ...

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Protecting the Deal Against Pre-Emptive Debt Hazards

Technical Notes

Nov 18, 2009 — Neil Boyle

Once the contract is in place, the security of project financed infrastructure is frequently threatened by revenue volatility and “creeping maladaptation” caused by the pre-emptive nature of highly leveraged bonds that are held by creditors for termination if things go awry. “Creeping maladaptation” refers to the incremental nature of the ...

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