Question

Which of the following statements about project-finance on a non-recourse basis is true?

I. Project finance loans are provided directly to the project sponsors who then fund the project under development.

II. Project finance loans are secured by the assets and operations of the project’s sponsors.

III. Project financing is typically syndicated to a consortium of lenders due to the vast scale of many projects

Answer 1

option I i.e Project finance loans are provided directly to the project sponsors who then fund the project under development.

Non recourse project finance has the following characteristics-

• Non-recourse financing allows the lender to repay the loan only from the profits of the project that the loan is funding.
• Other assets of the borrower can not be seized to recoup the loan.
• Non-recourse financing generally requires substantial collateral and a higher interest rate