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The nature of credit risk in project finance

Author

Listed:
  • Marco Sorge

Abstract

In project finance, credit risk tends to be relatively high at project inception and to diminish over the life of the project. Hence, longer-maturity loans would be cheaper than shorter-term credits.

Suggested Citation

  • Marco Sorge, 2004. "The nature of credit risk in project finance," BIS Quarterly Review, Bank for International Settlements, December.
    • Handle: RePEc:bis:bisqtr:0412h
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    References listed on IDEAS

    as
    1. Merton, Robert C, 1974. "On the Pricing of Corporate Debt: The Risk Structure of Interest Rates," Journal of Finance, American Finance Association, vol. 29(2), pages 449-470, May.
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    Citations

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    Cited by:

    1. Kim, Seon Tae & Choi, Bongseok, 2019. "Price risk management and capital structure of oil and gas project companies: Difference between upstream and downstream industries," Energy Economics, Elsevier, vol. 83(C), pages 361-374.
    2. Firouzi, Afshin & Meshkani, Ali, 2021. "Risk-based optimization of the debt service schedule in renewable energy project finance," Utilities Policy, Elsevier, vol. 70(C).
    3. Cruz, Carlos Oliveira & Sarmento, Joaquim Miranda, 2018. "The price of project finance loans for highways," Research in Transportation Economics, Elsevier, vol. 70(C), pages 161-172.
    4. Jakob Müllner & Sinziana Dorobantu, 2023. "Overcoming political risk in developing economies through non-local debt," Journal of International Business Policy, Palgrave Macmillan, vol. 6(2), pages 159-181, June.
    5. Megginson, William L., 2010. "Introduction to the special issue on project finance," Review of Financial Economics, Elsevier, vol. 19(2), pages 47-48, April.
    6. Asian Development Bank & World Bank & Japan Bank for International Cooperation, 2005. "Connecting East Asia : A New Framework for Infrastructure," World Bank Publications - Books, The World Bank Group, number 7267, April.
    7. Müllner, Jakob & Puck, Jonas, 2018. "Towards a holistic framework of MNE–state bargaining: A formal model and case-based analysis," Journal of World Business, Elsevier, vol. 53(1), pages 15-26.
    8. Torsten Ehlers, 2014. "Understanding the challenges for infrastructure finance," BIS Working Papers 454, Bank for International Settlements.
    9. Choi, Bongseok & Kim, Seon Tae, 2018. "Price volatility and risk management of oil and gas companies: Evidence from oil and gas project finance deals," Energy Economics, Elsevier, vol. 76(C), pages 594-605.
    10. Müllner, Jakob, 2016. "From uncertainty to risk—A risk management framework for market entry," Journal of World Business, Elsevier, vol. 51(5), pages 800-814.

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    More about this item

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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