25824 Project Financing

Faculty of Business: Finance and Economics
Credit points: 3 cp

Subject level: Postgraduate

Result Type: Grade and marks

Requisite(s): 25741 Capital Markets AND 25765 Corporate Finance
These requisites may not apply to students in certain courses.
There are also course requisites for this subject. See access conditions.

Handbook description

This subject provides students with an understanding of the particular risks involved in project financing. It develops abilities to overcome the risks involved in project finance through analytical techniques and looks at the role of project financing in the modern economy with reference to recent projects in Australia and South-East Asia. Topics covered include: identification and management of project risk; project financing; evaluation of projects; structuring; and documentation.

Subject objectives/outcomes

On successful completion of this subject, students should be able to:

Identify which assets to fund using project finance
Understand the risks in the varying stages and the management of risks
Analyse the importance of credit ratings for refinancing loans and assessing counterparty risk
Use sensitivity analysis and independent reviews in project financing evaluation
Understand the importance of documentation and the use of guarantees to enhance the value of a project.

Contribution to graduate profile

To provide students with a broad appreciation of Project Finance in developing large scale projects and its importance to economic development in developed and developing economies.

Teaching and learning strategies

This will be achieved in a intensive lecture-seminar format where practical case studies and examples will be analysed.

Content

An overview
Identification and Management of Project Risk
Ratings for project financing
Financial Evaluation - Preparing and Calculating
Structuring and Funding
Documentation and Performance Guarantees.

Assessment

Assignment (Individual)	40%
This will assess students' understanding of the concepts of fund raising in international markets. It will also allow students to demonstrate that they can use both spreadsheets and word processing packages to tackle practical problems. This assignment will allow students to demonstrate that they have met objectives 1-5.
Final Examination (Individual)	60%
This exam, which may consist of multiple choice and short answer questions, will test students' understanding of the theory and their ability to apply the theory to financial decisions. This will enable students to demonstrate that they have met objectives 1-5.

Recommended text(s)

Nevitt, P.K.(1996) Project Financing 5th ed. Euromoney Publication

Indicative references

Chnace C. (1995) Project Finance IFR Publishing Ltd. (London)

Bruce R, McKern B, Pollard and Skully M. (1997) Handbook of Australian Corporate Finance 5th Ed Butterworth

Larry H P Lang (1998) Project Finance in Asia AFIB Book.