Investment protection in non-recourse project finance: the lender’s perspective

Abstract

Project finance, as a non-recourse (or limited-recourse) financing model has been gaining significant popularity in international projects, especially in developing countries within the past decades due to its unique structure and specifications, which contrast traditional financing methods. Due to the model’s non-recourse nature, however, project lenders, while assuming higher returns, also assume higher risks, having possibility to claim security solely over project assets and project cash flow. This paper examines and reviews certain security methods in non-recourse project finance available to the lenders, as well as possible differences in the legal framework related to these remedies in different jurisdictions.