GENERALLY

As a project financing is structured, project sponsors and host governments should constantly monitor the availability of debt and equity, as affected by the unique goals and risks involved in the particular deal being pursued. Lender and investor interest will vary depending on these goals and risks. Commercial lenders will pursue projects with predictable political and economic environments. Meanwhile, multilateral institutions, with less emphasis on political and economic stability, will seek involvement in projects where they can also promote technology, social goals, exports, and environmental goals.

Close attention to the potential debt and equity sources is also necessary because of the frequent changes in the goals and capacities of lenders and investors. A risk that materializes with an individual project in the same country as a project in development could temporarily delay all financings in the same country. Debt crises (like the 1998 Asian currencies instability and the Mexican peso crisis), philosophical changes at multilateral institutions (like increased attention to the effect of projects on the environment), and other factors can also influence loan and investment fund availability. Thus, it is sometimes prudent for the project sponsor to pursue simultaneously alternative financing schemes for the same project, such as pursuing commercial bank financing with bilateral or multilateral support, while pursuing a bond offering rated by a credit rating agency.