International Finance Techniques - John Forry
International tax and finance expert John Forry (J.D. Harvard Law School) gave a two day (12 hour) course on International Finance Techniques at Uppsala University (Uppsalaekonomerna). The course covered the topics listed below, as well as aspects of Islamic Finance and Investment Funds. The course was attended by about 70 students and provided essential knowledge for business and law students who intend to plan a carrer at the international level as a professional advisor and/or to practice in the field of international financing multi-national participants.
Project Finance. The principal characteristics of project finance are the non-recourse financing of a project - those providing the equity and debt financing must look primarily to the project facility's revenues for repayment of their investment and creation of profit. Limited recourse to other assets of a governmental sponsor or financial guarantor may be available. In the context of the international development of fixed tangible property such as infrastructure facilities, the legal and tax issues can be divided into several key elements.
Capital Market Finance. The key to achieving an international capital market debt placement to institutional investors lies in obtaining an investment grade rating for the debt, such as BBB (or equivalent) or higher from a recognized rating agency (S&P, Moody's or Fitch). However, project financing - largely composed of non-recourse debt secured only by the assets of a single infrastructure project - often leaves too many risks to be borne by the project company to permit its debt to receive such a rating.
Structured Finance. Structured financing combines income streams from several assets into a special purpose vehicle (SPV). The SPV purchases the assets and issues its own debt instruments. If properly structured, the SPV is free of claims from other creditors of the company that originated the project's income streams. For infrastructure projects, structured financing can increase the credit rating of project debt by reducing the risk of any one project's default causing a funding default on the debt package.