Project Finance Characteristics

Project financing is usually chosen by project developers in order to inter alia: 

1. Eliminate or reduce the lender’s recourse to the sponsors
    
2. Permit an off-balance sheet treatment of the debt financing
    
3. Maximize the leverage of a project
    
4. Circumvent any restrictions or covenants binding the sponsors under their respective financial obligations
    
5. Avoid any negative impact of a project on the credit standing of the sponsors
    
6. Obtain better financial conditions when the credit risk of the project is better than the credit standing of the sponsors
    
7. Allow the lenders to appraise the project on a segregated and stand-alone basis
    
8. Obtain a better tax treatment for the benefit of the project, the sponsors or both
    
9. Reduce political risks affecting a project