Assessment of Credit Risk in Project Finance

Kong, Dequan; Tiong, Robert L. K.; Cheah, Charles Y. J.; Permana, Andre; Ehrlich, Matthias

doi:10.1061/(asce)0733-9364(2008)134:11(876)

Cited by 30 publications

(22 citation statements)

References 10 publications

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“…Up until now, there is no uniform definition of the bankability of a project. Commonly, a PPP project is bankable if lenders are willing to finance it or the sponsor can convince the lenders to support it [9,20]. From the assessment perspective, a bankable project involves a solid financial, economic, and technical plan, with a risk allocation scheme appropriate for the nature of the project, the risks involved, and the interests of the lenders, implying an acceptable credit risk [8,22].…”

Section: Rational Of Bankability Evaluationmentioning

confidence: 99%

“…Considering the quantitative loan analysis, the lenders believe that a project is bankable if the project company has the ability to service the principal and interest payment. In addition, the exposure of the lenders to default by the borrowers is acceptable [9,22]. e lessons from the subprime mortgage led to banks not completely relying on the credit risk assessment of external credit rating agencies [24].…”

Section: Rational Of Bankability Evaluationmentioning

confidence: 99%

“…Projects developed using PPP approach (PPP projects) are well known for the high leverage ranging from 50% to 90%, relying extensively on the debt capital provided by the debt holders such as banks and other financial institutions [8]. erefore, raising sufficient funds via the debt channel is a key task for PPP sponsors and project companies [9]. However, international capital markets have experienced high levels of instability and adversely affected the funding arrangements for social and economic infrastructure projects since 2008, leading to limited availability of equity and debt capital and a higher cost of capital [10,11].…”

Section: Introductionmentioning

confidence: 99%

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Identifying Critical Bankability Criteria for PPP Projects: The Case of China

Zhu

Chua

2018

Advances in Civil Engineering

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Public-private partnership (PPP) projects employ a high leverage in terms of debt finance needed by the private consortium. Debt finance providers need to know the bankability-related issues of PPP projects to make the timely arrangement of debt financing and avoid funding problems. However, there is still a lack of a systematic research on the bankability of PPP projects despite the worsening debt arrangement situation for PPP projects after the credit crisis and economic recession from 2008. To bridge this knowledge gap and enhance the practical debt arrangement of PPP projects, this study aims to identify and prioritize the critical bankability criteria of PPP projects. To achieve the objectives, 41 bankability-related criteria were first identified from a comprehensive literature. A structured questionnaire survey was then conducted with 31 industry experts in China who worked in financial institutes and had experienced PPP projects to investigate the relative importance of each criterion. To handle the uncertainty and vagueness of the subjective evaluation from surveys, this study analyzed the relative importance weight of each criterion using a proposed fuzzy analytical hierarchy process-based approach. The results showed that political environment, economic environment, shareholders’ credibility, financial market, legal system, public sector’s reliability, financial structure, and regulatory framework were ranked as the top eight critical bankability criteria. The findings of this study first contributed to the project finance body of knowledge for the bankability of PPP projects. Moreover, the outputs of this study would provide valuable information to the private and public sectors for formulating strategies on improving the bankability of PPP projects.

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Section: Rational Of Bankability Evaluationmentioning

confidence: 99%

Section: Rational Of Bankability Evaluationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Identifying Critical Bankability Criteria for PPP Projects: The Case of China

Zhu

Chua

2018

Advances in Civil Engineering

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“…Electrical measurement of insertion loss of TV is shown in Figure10 (b). The measurement showed an insertion loss of 0.19dB at 2.4GHz which is much better than that of conventional TMV type PoP's [10].…”

Section: Demonstration Of An Ultra-thin Two-stack Packagementioning

confidence: 80%

Ultra-thin and ultra-high I/O density package-on-package (3D Thin PoP) for high bandwidth of smart systems

Kim

Honrao

Raj

et al. 2013

2013 IEEE 63rd Electronic Components and Technology Conference

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Package-on-package (PoP) technologies used in smart phones and tablets are reaching limits in logic-to-memory bandwidth and in thickness reduction. Advances in PoP including through-mold vias (TMVs) and low-CTE, highmodulus laminate substrates have not been able to overcome the I/O density and thickness limitations to date. To overcome these barriers, two major technologies have been pursued. The first approach is chip-first embedding in organic dielectrics and in fan-out wafer level packages. While this can achieve higher I/O's, they face many challenges that include large-die reliability, intermediate testability for higher yield, thermal dissipation, and new supply-chain model. The second approach to address the need is the so-called wide-I/O logic and memory stacking with through silicon vias (TSVs), which promises highest bandwidth in lowest profile, but is viewed as too complex and costly due to TSV integration in logic IC. Georgia Tech PRC proposes and demonstrates, for the first time, a third approach that is more manufacturable and costeffective. This is referred to as 3D Thin PoP -a more advanced 3-dimensional POP, -designed to achieve ultra-thin stacked packages in 3D with higher chip-to package and package-to-package I/Os to achieve higher bandwidth. This paper reports a number of breakthrough advances in 3D Thin PoP, thus providing a path to extend PoP. These innovations fall into three areas that include: (a) Ultra-thin, 150µm thick organic substrate with multiple layers of build-up wiring with precision cavities ready for chip assembly, (b) die-to-package Cu-Cu interconnections at 30µm pitch bonded at 160 o C, and (c) package-on-package stacking with 50µm interconnect pitch. Low signal losses are achieved by having shorter chipto-chip I/O's and lower stand-off interconnections. These innovations enable higher bandwidth in 3D Thin PoP by virtue of 8x improvement in I/Os combined with 2-3x reduction in total thickness over current PoP.

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“…Reference (s) Anticipating project cost overrun (CN1) World Bank and Public-Private Infrastructure Advisory Facility (2007) Committing the lowest level of equity possible (CN2) Khan and Parra (2003) Securing the project cash flows from the risks (CN3) Wibowo (2006), Kong et al (2008) Fiscal incentive or tax benefits from the government authority (CN4) Grimsey and Lewis (2004), Kulkarni and Prusty (2007), Khan and Parra (2003) Transparency during negotiation process (CN5) Demirag and Khadaroo (2011) (2003) Knowing whether the project needs a subordinated lender or not (CN10) Khan and Parra (2003) Reaching an agreement on forecast for Cash Available for Debt Service (CN11) Khan and Parra (2003) Risk allocation through all project agreements (CN12) Jun (2010) Assurance that the lenders are only lending a reasonable amount (Debt Sizing) (CN13) Schaufelberger and Wipadapisut (2003), Hucknall (2010) Insurance for any material error in the model resulting in the debt not being repayable (CN14) Hucknall (2010) Credit Committee requirement for approving the sponsor's credit application (CN15) Asenova and Beck (2003) Public-private partnership projects financial closing on acceptable terms and construction start, from the initial model, the sponsor(s) and the lenders (modelling bank) develop a lender base case financial model in order to undertake due diligence of the project's financial viability. However, due diligence procedure for PPP projects, with a relative high investment volume, is a time consuming process (Daube et al, 2008).…”

mentioning

confidence: 99%

Stakeholders’ expectations in utilising financial models for public-private partnership projects

Kurniawan

Ogunlana

Motawa

2014

Built Environment Project and Asset Management

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Purpose – The purpose of this paper is to explore stakeholders’ expectations in utilising PPP financial models in order to ensure that each stakeholder understands the expectations of others before negotiating and reaching contract agreement by all the stakeholders. Design/methodology/approach – Five common sets of 40 expectations have been identified through a systematic research approach, and their relative significances were verified based on pilot studies in India and the UK and expert opinion solicited worldwide through a structured questionnaire survey. The survey responses were evaluated by using statistical analyses. Findings – The most important stakeholders’ expectations in utilising PPP financial models were identified at five different stages in a project. They are bankable (at the pre-proposal stage), assessment of project's ability to carry senior debt (at the contract negotiation stage), sensitivity analysis for key commercial issues (at the finance-raising stage), debt service evaluation towards cost overrun and other adverse events (at the construction stage), and assurance of secure operational cash flow (at the operation stage). Although some of the most important expectations are agreed on by all stakeholders, the disagreement of most important expectations should also be considered by the other stakeholder(s) in order to achieve effective and efficient negotiations. Originality/value – The paper draws attention to stakeholders’ expectations in utilising a financial model that is arguably overlooked in evaluating PPP projects. It does so in order to speed up the negotiation process as a means of minimising cost and time expenditures on PPP contract negotiation.

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Assessment of Credit Risk in Project Finance

Cited by 30 publications

References 10 publications

Identifying Critical Bankability Criteria for PPP Projects: The Case of China

Identifying Critical Bankability Criteria for PPP Projects: The Case of China

Ultra-thin and ultra-high I/O density package-on-package (3D Thin PoP) for high bandwidth of smart systems

Stakeholders’ expectations in utilising financial models for public-private partnership projects

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