Beruflich Dokumente
Kultur Dokumente
Single source Multiple source Very huge (Much more than single source) Much time consuming Loan spread do not increase with loan amount as the number of sources are more. More complex Very high end expertise is Less expertise needed. needed eg. sovereign, commercial, and project lending expertise Much higher negotiating Negotiating power (for borrowers) Lower, as options are less. power is with the borrower as there is many options available. Much higher, because as Negotiating power on price and terms (in case of lenders) there is less option present with the borrower, lenders can dictate the terms and also the restrictions. Capacity- pricing tradeoffs Decisions of quantum Only one source. for each source is to be determined. Lower as borrower have other options too.
Amount of capital
Limited
Time
Loan spreads
especially for the projects as there is very high risk of failure present.
Low
High
Interest rates
Usually lower(more fluctuating because more kind of funds involved) High due to presence of
different conditions and many parties. High,eg.:Advisory fees Execution fees Legal fees
Additional costs
Low
Local bonds
Companies, which need financing, issue bonds in capital market. Advantages of bonds issuance: Allow investors to participate in and benefit from the project
Develop the local Capital markets Consistent with the government policy Fixed interest rate Long tenors (10 to 20 years)
ECA Financing
Provided by export credit agencies cover 90% to 95% of loan losses due to political risk and 85% to 95% of losses associated with commercial risk Advantage: Availability Hallo effect: help sponsors attract financing
Metals-Linked Facility
Typically are handled by different groups within investment or commercial banks It has 2 components A basic commercial loan with a spread over Libor A hedging component similar to a call option on aluminum (The hedging component provides benefits to lower the cost of debt it ties the interest rate and debt service requirements to the underlying price of a commodity such as aluminum)
The hedging component allows decreasing cost of debt. Could be viewed as a competing source of Capital