Enterprise Management: New Mode Of Project Financing And Its Characteristics

In the initial stage, the lenders in the project financing market were mainly foreign banks, and the loan varieties included commercial loans, export credits and government loans. Most of the loans were used to import machinery and equipment produced abroad.

The lender requires not only to set up a guarantee on all assets of the project, but also often require and obtain the sponsor's surety bond or even the guarantee of the government of the project location, though this is not a common arrangement in the mode of project financing.

To this end, the investment and financing sector is here to interpret two new models of project financing.

After years of development, the mode of project financing pactions carried out by Chinese companies and banks has changed greatly.

At present, there are two types of project financing pactions in China: project financing in China and project financing outside China, and the two modes have their own characteristics.

I. project financing within the territory

(1) China's local banks have become the main source of funds.

(2) large state-owned enterprises with the strongest bargaining position in the market, including PetroChina and Sinopec, have gradually accepted this financing model.

(3) at present, the use of project financing mode focuses on chemical, nuclear power plants, highways, bridges and other infrastructure projects.

(4) the paction is restricted by the laws and regulations promulgated by the relevant regulatory bodies in China, including the most directly related rules such as the guidance of project financing business, and some indirect provisions, such as Interim Measures for the management of fixed assets loans, Interim Measures for the management of liquidity loans, guidelines for syndicated loan business, and so on.

(5) the characteristics of the buyer's market are very obvious.

The current domestic market is in a state of tight monetary policy. Because of the international financial crisis, foreign banks have relatively tight funds.

However, the borrowers of project financing still have a strong bargaining position and are able to ask borrowers for favorable loan conditions.

This is mainly due to the fact that project sponsors are large and powerful companies. The project itself is also very large, and there is usually strong local government support.

These favorable loan conditions may not have occurred in general pactions.

For example, the borrower of syndicated loan may ask for the following provision in the loan agreement: if any member fails to lend money in time, the share that he does not provide shall be supplemented by the lead bank and other participating banks.

Another example is: if any lender or agent is not in time.

If the funds are paid, the interest shall be paid to the borrower in accordance with the loan interest rate stipulated in the loan agreement.

Over the past few years, our government has supported it.

The "going out" business is developing rapidly, and these pactions often require the support of Chinese banks.

Many of these pactions have adopted project financing models and have the following characteristics:

(1) Chinese banks have grown rapidly into important participants in overseas project financing pactions, taking the lead role in some pactions.

Although Chinese banks still need a lot of learning, Chinese banks have greatly improved their business experience and market influence with sufficient financial strength.

(2) most sponsors or borrowers have Chinese background.

As a lender, Chinese banks are not only required to set up guarantees for all assets of the project, but also often require the Chinese parent companies behind to issue guarantees or commitments.

(3) most pactions are concentrated in the field of natural resources.

(4) there are specific laws and regulations applicable to such cross-border pactions.

For example, if the Chinese parent company provides guarantees to the lender in the paction, the rules of external guarantee need to be observed.

Generally speaking, Chinese parent companies need to obtain approval from the foreign exchange management department before they provide guarantee and register in time.

With the internationalization of RMB, in recent years, with the vigorous promotion of the government, the process of RMB internationalization has been developing in depth, and has now been promoted to the field of capital projects.

However, in the actual operation level of cross-border RMB business, including the entry and exit of funds, the opening and supervision of accounts, and the provision of guarantees, the relevant departments can still make more specific policy arrangements in time.

It is believed that through the interpretation of the new financing mode of the two projects, the entrepreneurs will provide some help to the entrepreneurs in the process of selecting project financing.