TY - JOUR T1 - Project Finance with Limited Recourse JF - The Journal of Structured Finance SP - 97 LP - 104 DO - 10.3905/jsf.2007.698660 VL - 13 IS - 3 AU - Michel Gendron AU - Van Son Lai AU - Issouf Soumaré Y1 - 2007/10/31 UR - https://pm-research.com/content/13/3/97.abstract N2 - Project finance has become an important method for financing large-scale, capital-intensive projects, such as power plants, oil pipelines, roads, tunnels, etc. We analyze debt capacity and risk choice in a project finance arrangement where the project's lenders have limited recourse to the sponsoring company's assets. We draw a parallel between vulnerable financial guarantee loans and project finance loans with limited recourse. Using contingent claims analysis, we illustrate the trade-offs between risk and debt capacity in those cases where the project's lenders have recourse to the sponsor's assets and in those where they do not.TOPICS: Credit risk management, project finance, volatility measures ER -