Stuart Snaith

Testing for symmetry and proportionality in a European panel

Symmetry and proportionality for 15 European economies 1973 : 04–1998 : 12 is tested in a panel regression framework that allows for permanent shocks. Support is found for both restrictions and thus for general relative PPP in the US dollar but not the German mark panel.

Project finance loan spreads and disaggregated political risk

This article provides novel evidence on project finance loan pricing using economic and disaggregated political risk determinants. As expected, our findings suggest that the presence of loan guarantees and lower levels of aggregate political risk results in cheaper project finance loans. The evidence in support of disaggregated political risk as a pricing determinant is negligible for developed countries, but significant for developing countries. For the latter we find that loan spreads are negatively related to the effectiveness, quality and strength of a countrys legal and institutional systems whilst lower levels of government stability and democratic accountability are associated with lower loan spreads. Our results are consistent with a risk allocation approach to project finance deals.

Global Project Finance, Human Rights and Sustainable Development: Project finance investments and political risk

Introduction In recent years project finance (PF) has become an increasingly popular method of funding long-term capital-intensive infrastructure projects worldwide, particularly in developing countries. The nature of modern project finance is to use limited or non-recourse syndicated loans to a special purpose vehicle (SPV), where such debt typically represents the lion’s share of the capital structure. The vehicle usually has one objective, such as to build a dam or a pipeline, and therefore avoids some of the decision-making tensions common in the corporate finance literature. In typical project finance syndication there tend to be several types of bank. It is not uncommon for multilateral development banks such as the International Finance Corporation (IFC) of the World Bank group to participate in the lending process; however, the biggest lenders are syndicates of large international banks. These institutions (e.g. Barclays plc and HSBC plc) are private sector entities that are characterized by the broad objectives of profit and shareholder wealth maximization.