Course Outline & Course Evaluation Form

Session: 2014-2016
Term: V
Course Name: Project & Infrastructure Finance
Name of Course Coordinator/Instructor(s): Prof. Prakash Singh (IIML) / Mr. Sivanand Subidhi (Axis Bank)
Course Objectives:

Knowledge of how large projects are structured, analyzed, appraised, financed and managed
Understanding innovative financial products and structures such as take out financing & risk participation
facilities and financial modeling for quantifying viability-gap funding or management fees
Understanding how risk management affects project value, describe a process of risk management, and
present a framework of strategies for managing various kinds of project risks
Understanding best practices in public-private partnerships in concession rights awards, contract design and
negotiation
Review options for credit enhancements to improve access to international bond markets, such as bank
guarantee instruments, Export Credit Agency programme and political risk insurance

Learning Outcomes:

Understand financial tools and techniques to interpret qualitative and quantitative borrower data in making
sound lending decisions especially in the Large and Infrastructure borrower segments.
The students will learn how to handle and price risk in lending decisions.
Relation of Bank lending to banks profitability and capital.
Understand ways to handle distressed debt and detect early warning signals.
Understand the International Capital accords and the Framework of Credit Risk Management and Rating
Models.
Prepare and write Term Sheets and appraisal notes for Term Loans, Letter of Credit and Bank Guarantees.
Understand the Corporate/ Borrowers perspective and the importance of structuring loan products
appropriately and provide sound and logical analysis to support their recommendations.

Pedagogy:

Mainly Cases, Exercises and class room discussions around that. Power Point presentations would be used to
conceptualize the theoretical background.

Prescribed Text:
1. Project Financing- Asset based Financial Engineering, 2nd Edition, John D. Finnerty, Wiley India

Additional References if any:

o Esty, Benjamin C. (2004). Modern Project Finance: A Case Book, John Wiley & Sons, Inc.
o Little, I.M.D. and Mirrlees, J. A. (1974). Project Appraisal & Planning for Developing Countries,
New Delhi, Oxford & IBH Publishing Co.
o Nevitt, Peter K and Frank J Fabozzi (2000). Project Financing, Euromoney Books, seventh
edition
o Raghuram, G., Rekha Jain, Sidharth Sinha, Prem Pangotra & Sebastian Morris (Eds.) (1999).
Infrastructure Development & Financing: Towards a Public-Private Partnership, Macmillan
o UNIDO (1972). Guidelines for Project Evaluation, New York, UNIDO
o Yescombe, E. R. (2002). Principles pf Project Finance, Amsterdam, Academic Press
o World Development Reports & India Infrastructure Reports

Evaluation Method:
Sr. No.

Component

Weightage (%)

Duration Of Exam

a)

Mid Term Examination

25% 90 minutes

b)

End Term Examination

35% 120 minutes

c)

Quiz

15% 30 minutes each

d)

Project Assignments

20%

e)

Class Participation

5%

Open Book /Closed

(n-1)

Sessions Wise Plan

Total Sessions

Session-1-2

Session-3-4

Session-5-7

Topic(s) to be covered
Scope of Banking: Asset Management,
Commercial
Banking
(Credit
and
Financing), Corporate and Investment
Banking, Retail and Inclusive Banking,
Treasuries,
Trade
Financing,
Risk
Management etc
Contemporary issues in Indian Banking and
Regulation issues in the post Lehman Era
Fundamental Forces of change in Banking
UNDERSTANDING BALANCE SHEET OF A
BANK
Financial Statements of a Commercial
Bank and Evaluating Bank Performance
Alternative Models of Bank Performance
Project Finance versus Corporate
Finance: Comparison and Contrasts,
different Project Finance structures,
Banking Risks in Project and Infrastructure
lending
Project Evaluation in Emerging Markets:
Cash Flow Modeling & Discount Rates

Session-8-9

Session- 10-11

Session-12-13

BANKING RISKS- I
Liquidity Risk Static and Dynamic
Liquidity Management
Cost of Funds and Transfer Pricing
Liabilities Management (domestic and NRI
deposits), and Reserve Requirements
(CRR),LAF repos and other liquidity
management avenues
BANKING RISKS- II
ALM/ Interest Rate Risk
Asset-Liability Management: Sources of
Interest Rate Risk
Interest Rate Risk Measurement : Dollar
Gap and Duration Gap; Off Balance sheet
methods of Banking Risk Mitigation:
Derivatives and other risk structures
LARGE CORPORATE LENDING
Financing Strategy and Execution For
lending decisions Large Corporate
loans(Borrowers/Corporate Perspective)

Reference, if any
Readings, Notes and Articles from
Economic and Political Weekly (EPW) and
others
Note on Bank Loans (HBS 9-291-026)

Notes on Understanding Financial

Statements of a Bank (Self)

Why study Large Projects (HBS 9-203031)

An
overview
of
Project
and
Infrastructure Finance (HBS, 9-210-061)
Chad
Cameroon
Petroleum
Development & Pipeline Project (HBS 9202-010)
Southport Minerals, Inc. (HBS 9-274110)
Exercises

Exercises

Real Industry Examples/ Exercises

Session-14

Session-15-16

Session-17

Session-18

Session-19

Session-20

Introduction to Term Loan

Preparation of Term Sheet
Non Fund Based Facilities:
Sanction of Inland Letter of Credit and
Bank Guarantees
THE WATERFALL SCHEME
Capital Budgeting for Infrastructure
Investments; Financial sustainability of an
Infrastructure Project, Technical Aspects
of Loan agreements for Infrastructure
Investments

Real Industry Examples/ Exercises

PPP
Public Private Partnership in
Infrastructure, Concept of SPV
(BOOT, BOLT and other structures);
Analysis of Borrowers Financials
Cash Flow Projections, Modelling and
Credit Ratios

Airport Expressway Metro Line:

Infrastructure Project Financing and
Implementation through PPP (Ivey
W11529)

DEBT SYNDICATION
Process, Participants and Economics of
Syndicated Lending

Chases Strategy for Syndicating the Hong

Kong Disneyland Loan (A) (HBS 9-201-072)

CREDIT RATING MODELS

Rating Models : Traditional, Options and
the KMV model, VAR approach: JP
Morgans Credit Metrics
Credit Risk Measurement and Loan Pricing
Credit Risk and Capital
Risk Adjusted Performance including
RAROC measures

BASEL II: Assessing the Default and Loss

characteristics of Project Finance Loans
(A) (HBS 9-203-035)

STRESSED LOAN PORTFOLIOS

Follow up and Monitoring of Advances
Early warning signals for sickness
Corporate Debt Restructuring Mechanism
BASEL III
The New Basel Capital Accord: Structure
and Imperatives , Operational Risk
Standardized Approach, Internal Ratings
Based Approach, BASEL- III

Readings on Corporate Debt

Restructuring (CDR)

Polands A2 Motorway (HBS 9-202030)

Readings on BASEL III