PROJECT FINANCING & SUSTAINABILITY

PROJECT FINANCING & SUSTAINABILITY - MOUNT KENYA...

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MOUNT KENYA UNIVERSITY BACHELOR OF DEVELOPMENT STUDIES BED4204-PROJECT FINANCING & SUSTAINABILITY ASSIGNMENT INSTRUCTIONS: ANSWER ALL THE QUESTIONS 1. Differentiate between non-recourse project financing and limited recourse project financing (4 marks) Nonrecourse means that the lender may not turn to the sponsor’s non-project related assets if the revenues generated by the project, SPE, or project collateral used to secure the loan are insufficient to cover the principal and the interest payments on the loan. The lender has recourse only to the project not the sponsor. A non-recourse loan is defined as a loan where the borrower or guarantors are not personally liable for repaying any outstanding balance on the loan. Non-recourse financing is typically found on longer term permanent commercial real estate loans placed on a stabilized and performing asset. However, a common misconception with non- recourse loans is that if a loan is non-recourse then a borrower or guarantor can never be held personally liable in the case of a loan default. This is not always true and there are several
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