PROJECT FINANCE DEVELOPS NEW RISKS
Project finance is in the deepest of troughs. To survive,
contractors are being asked to work more and more in the private sector
and to assume greater risk, such as taking equity and running completed
plants.
Business contractors can no longer be choosers and are willing to
pay fees to any bank that can cobble together a competitive financing
package.
This is a reversal of the situation in the early part of this
decade when banks were clamouring to offer financial services and gain
their share of a thriving market. There has been about a 60% drop in
world construction and the value of contracts has dropped by about a
third, according to Hovey Clark, vice chairman of the finance division
of the US construction giant Bechtel.
When the boom of the 1970s ended the international tightening of
credit made loans hard to come...
