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Debt-equity ratio
Factors in Decision Making
Philippines Malaysia United States
Sep-17 Sep-18 Sep-17 Sep-18 Sep-17 Sep-18
5 Year Bond Yields 4.64% 7.12% 3.59% 3.77% 1.94% 2.98%
We can only make the best decision at the time with the best available data
Sponsors use
assets and cash flows from the
existing business to guarantee the credit
extended by the lenders. If the project is not
successful, lenders have direct recourse to the
sponsor’s assets in order to achieve repayment.
1) Assignment of Revenues
Contract must allow this assignment of revenues and receivables to
the lender or a common security trustee if the loan is syndicated
4) Pledge of Shares
Liens on project assets may not be allowed
Lenders may require require that shares of the SPC be pledged
Project Finance - Loan Collateral
5) Sponsor’s Support
Possibly through a corporate guarantee or a standby letter of
credit issued by a bank acceptable to the lenders
Project Finance - Covenants
Revenue Streams
Projected demand, prospects for growth, consumption figures
Projected Costs
Estimates based on most current costs
Overhead and other administrative costs
Inflation adjustment
Contingency
Investment Decision: NPV
• Biggest chunk of PF Loans goes to the power sector, whether globally or regionally or even
locally in the Philippines
• PH Deals include Meralco’s Power Plant in Atimonan, Quezon; SMC’s Power Plant in Limay
Bataan; and the Rehabilitation of the Angat Hydroelectric Power Plant
South East Asia Project Finance Loans 2017 • China Development Bank’s
# of
Bank (US$ Mil) Rank % Issues single deal was worth US$ 4.5
China Development Bank 4,500.0 1 20.8 1 Bn
Bank of Philippine Islands 2,651.4 2 12.3 5
Philippine National Bank 1,056.3 3 4.9 1
China Construction Bank 528.6 4 2.5 1 • BPI and PNB shared credit for
Natixis
ANZ Banking Group
170.9
120.0
5
6*
.8
.6
1
1
the US$ 2.2 Bn Atimonan
ING 120.0 6* .6 1 One Energy deal
Societe Generale 120.0 6* .6 1
Bank Rakyat Indonesia 70.5 9* .3 1
Bank Negara Indonesia PT 70.5 9* .3 1 • Cross border deals e.g.
Bank Mandiri 70.5 9* .3 1 Philippine banks not
Industrial & Comm Bank China
Cathay Financial Hldg Co Ltd
70.2 12*
70.2 12*
.3
.3
1
1
necessarily limited to
DBS Group Holdings 70.2 12* .3 1 Philippine projects
Malayan Banking Bhd 70.2 12* .3 1
Credit Suisse 70.2 12* .3 1
Banco De Oro Unibank Inc 68.2 17 .3 1 • Syndicate of banks can
Gazprombank 46.0 18 .2 1 finance one deal
Industry Total 21,599.0 100.0 25
Other Philippine projects that have
used PF Loans
Php 5.3. Billion Sewage Treatment Facility - Maynilad
Funding assistance from the Development Bank of the
Philippines through JICA’s Financial Intermediary or Two-Step
Loan
http://www.sec.gov.ph/wp-content/uploads/2017/02/BPI-GREEN-FINANCING-PRODUCTS.pdf
Project Finance Data
Most project finance facilities are private and public information is
limited. Numerous non-disclosure agreements are signed
between parties thus limiting the sharing of information.
“The best strategic partnerships are win-win-win: they are good for
you, good for your partner, and have an outsized impact on your
shared customer base.”1
1 – thinkgrowth.org
2 – Pinterest
END