Project finance transactions – Managing interest rate risk

In this article, the author summarizes the building blocks of effective interest rate hedging in project finance transactions and considers the varying perspectives of multiple creditors that have recourse to the same pool of collateral.

Coordinated drafting of the ISDA Master Agreement and other financing documents is critical to addressing the disparate perspectives of lenders, bondholders, and hedge providers that have recourse to the same collateral. This article discusses project finance structure, interest rate risk arising from loans, and drafting agreements for competing creditors of shared collateral.

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