Project Finance


Project Finance is a long-term structured financing for infrastructure projects based on project future cash flow.

Project Finance is a credit operation that usually meets, cumulatively, the following conditions:

• Constitution of a Special Purpose Entity (SPE) for implementation of the project to be financed, with the purpose of separating the cash flows, shareholders' equity and all of project risks;

• Project future cash flows should be sufficient to support financing expenses and administrative and operational costs;

• Project future revenues should be bound or assigned in favor of the financiers;

• Debt Service Cover Ratio (DSCR) forecasted for each year of the project operating phase should be sufficient to cover the financing expenses, considering some assumptions negotiated between the customer and the financiers;

• Establishment of a minimum amount for shareholders' capital contribution; and

• Structure of wide-ranging and sophisticated insurance, warranties and covenants.



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