Risks That Will Be Triggered During Hard Economic Times

The hard situation in the market affecting market demand

Projects, which are ideal for project financing, are those with predictable and stable cash flow patterns. Highway projects, power generation plants and high-speed rail fall into this category. The nature of the projects ensures a certain hold on the market for the product or service offered. The driver who does not wish to pay the toll for a highway may have the option of travelling along the old trunk road; but the savings in time and convenience offered by the highway will cause him to use the highway for long distance travel. An internal rate of return sufficiently attractive to attract project sponsors and lenders is invariably worked into the concession granted by the relevant government authority. With good government support and natural monopoly afforded by the nature of the project, the returns to the equity contributors and lenders are assured. Another way which projects can be insulated from