Int'l Project Finance

3 Credits · Level: Graduate, Juris Doctor

Energy and infrastructure assets drive economic development and human flourishing. This course teaches (1) how these projects are financed and built, particularly in risky environments (2) how participants cooperate despite conflicting incentives; and (3) the central role of a structure called project finance (“PF”) in surmounting associated challenges. PF teaches important lessons about incentives and the alignment of interests in long-term relationships. You’ll learn a conceptual framework useful not only for analyzing PF but also development and investment broadly, and practical problems in life. You’ll develop skills in analyzing risk, and appreciation for how difficult large projects are. We’ll begin with the differences between public and private sources of financial capital; debt andequity; and full- and non-recourse lending. We’ll examine why and when PF is useful, and its foundation of risk identification, allocation, and mitigation. Several case studies of classic transactions involving large energy, manufacturing, and transportation assets in developing markets will be instrumental in understanding PF. After the midterm exam, we’ll study capital structure (why we choose and how we adjust the proportions of debt and equity) and how this capital is gradually returned to its providers: project sponsors, banks, development/multilateral finance institutions, and export credit agencies. We’ll also discuss environmental and social considerations, and the network of legal contracts that mitigate project risk. The final exam will require students to demonstrate mastery of the conceptual PF frameworks and practical applications.