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INTERNATIONALEMERGINGMARKETSPROJECTFINANCE

TERMANDYEAR

PaulClifford

ProfessorOfficeLocation:n/a

OfficePhone:646-322-8053

E-mail:pcliffie@hotmail.com

OfficeHours:Day1xx:xx-xx:xx·Day2xx:xx-xx:xx

Canvas:PleasebesuretohaveyourannouncementandmessagingnotificationssettoASAP.

TEACHINGASSISTANTS

TAName1 xyzabc@columbia.edu

TAOfficeHours

COURSESHORTDESCRIPTION

ThisInternationalEmergingMarketsProjectFinance(IPF)coursewillprovidestudentswithastrongpracticalandtheoreticalframeworktobeabletoanalyzecomplexinternationalprojectsfromfirstprinciples,andwillcoverboththestructuringaspectsofthisfinancialdiscipline(commercialandlegalframeworks,keyriskandmitigants,financialmodelling)aswellasreal-worldprojectfinancecasestudies.Overall,thecourseprovidesapracticalandquantitativeapproachtounderstandingprojectfinancetransactions;focusesonenergyandinfrastructuretransactionsinemergingmarkets;integratesprinciplesofcorporatefinancewithanunderstandingofspecifictechnologies,industrialorganization,regulatoryframeworkandcountry-specificpolicies;examinesforeignexchangeissues,taxation,riskevaluationandmitigationandkeycontractualstructures;exploresthefundamentalsofInternationalProjectFinance;andcomplementsandaddstothecurrentfundamentalsofProjectFinancecourse.Thiscourseisrelevanttostudentscontemplatingcareersinfinancinginternationaldevelopmentprojects,consideringdualengineering/financedegrees,orworkingfordevelopers/sponsorsofinternationalinfrastructureprojectsorinternationalfinancialorganizationssuchasMultilateraldevelopmentinstitutions(WorldBank,AsiaDevelopmentBank,Inter-AmericanDevelopmentBank,AsiaDevelopmentBank,AsiaInfrastructureInvestmentBank).COURSEDESCRIPTION

TheIPFcoursewillfocusondeepeningstudent’sacademicknowledgeandunderstandingofthefinancingstrategies,structuresandrisk/returnallocationsforinternationalinfrastructureprojectsindevelopingcountries.Thecoursewillspecificallyaddressandcoverthedynamicsof“South-South”infrastructureinvestment,financingandcooperation

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acrosstheBRIC(Brazil,Russia,India,ChinaandSouthAfrica)countries.ItwillalsoanalyzetheemergenceandimportanceofnewGlobalfinancialinstitutionssuchastheAsiaInfrastructureInvestmentBank,thenew“WorldBankforAsia”createdbyChina.ThecoursewillalsocoverChina’snew$8Trillion“OneBelt,OneRoad”infrastructuredevelopmentpolicylinkingChinawithAsia,EuropeandEastAfrica.

Thecoursewillalsoanalyzesocialandenvironmentalrisksininternationalprojectsandthecurrentapproachoffinancialinstitutionstoassessandrankthesocialandenvironmentalrisksandimpactofprojectsandrelatedmitigationandmonitoringmeasuresrequiredtoensureprojectsaredevelopedinasustainablemanner.

COURSELEARNINGOBJECTIVES

Uponcompletionofthecourse,studentswillbeableto:

• Identifyandexplainkeyaspectsoffinancingforinternationalinfrastructureprojects,potentialsourcesoffinancing(exportcreditagencies,multilateralagencies,bonds,localcapitalmarkets)aswellascurrencyandpoliticalrisks

• Applypracticaltoolsandskillsetstoanalyzerisksandbusinessopportunitiesassociatedwithinternationalinfrastructureprojectsinkeyindustrysectors,includingbutnotlimitedto,power/renewableenergy,oilandgas,miningandmetalsandinfrastructure.

• Analyzeandinterprethowdebtandequityarebalancedwithinprojectfinancingstructuresanddevelopanappreciationinbreadthanddepthofthecorefinancialdocumentsandcommercialcontractsemployedinthesector.

ASSIGNMENTS

Designatethetypeforeachassignment(A-group,B-group/individual,orC-individual).

InordertoavoidambiguitythatmayleadtounintentionalviolationsoftheHonorCode,thedescriptiontypesforassignmentshavebeenstandardized.Theyarespecifiedinthetablebelow.

Type Designation Discussion of concepts

Preparation of submission Grade

A group / group Permitted with

designated group*

By the group Same grade for each member of the group

B

group / individual

Permitted Individually

(No sharing of any portion of the submission)

Individual

C individual / individual

None of any kind Individually Individual

D (An optional category to be defined in detail by the individual faculty member)

* The designated group can be either an assigned study group or a self-selected one.

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REQUIREDCOURSEMATERIALS

Esty,Benamin.ModernProjectFinance:ACasebook.Otherclasshandoutswillbeprovidedalongwithadditionalrecommendedreadingmaterial.

CLASSROOMNORMSANDEXPECTATIONS

Classattendanceisimportantasthecourselearningswillbuildprogressivelyoverthesemesterandprovidethefoundationforthegroupcasestudyproject.Classparticipationisencouragedandexpectedinanalyzingtheprojectcasestudies.

INCLUSION,ACCOMMODATIONS,ANDSUPPORTFORSTUDENTS

AtColumbiaBusinessSchool,webelievethatdiversitystrengthensanycommunityorbusinessmodelandbringsitgreatersuccess.ColumbiaBusinessSchooliscommittedtoprovidingallstudentswiththeequalopportunitytothriveintheclassroombyprovidingalearning,living,andworkingenvironmentfreefromdiscrimination,harassment,andbiasonthebasisofgender,sexualorientation,race,ethnicity,socioeconomicstatus,orability.

StudentsseekingaccommodationintheclassroommayobtaininformationontheservicesofferedbyColumbiaUniversity’sOfficeofDisabilityServicesonlineatwww.health.columbia.edu/docs/services/ods/index.htmlorbycontacting(212)854-2388.

METHODOFEVALUATION

Participation 20%Assignments 40%ClassPresentation 40%

Evaluationwillbe20%fromclassparticipation,40%fromcasestudyassignment/answers,and40%fromaclasspresentation.

Atthestartofthecoursestudentswillgroupedintoteamstoprepareacasestudypresentationtotheclass.Studentswillberequiredtoanalyzespecificstrategic,commercialandstakeholderissues/questionsrelatedtotheprojectcasestudyinaclasspresentation.Eachteamwillpresenttheircasestudy,theremainderoftheclassisexpectedtocontributetothediscussion,askprobing,thoughtprovokingquestions,andproposealternativesolutionsandstrategies.

COURSEROADMAP/SCHEDULE(SEEATTACHED)

InternationalEmergingMarketsProjectFinance-CourseSchedule

Week1:

Class1: InternationalEmergingMarketsProjectFinance-CourseOverviewCourseIntroductionandObjectivesOverviewofProjectFinanceHistoryofProjectFinance

Class2: UnderstandingProjectFinance

• CurrentGlobaltrends• How/whenProjectFinanceisapplied• NecessaryprerequisitesforProjectFinancing• Financialcashflowanalysis

Reading:Chapter(s)fromtextbook.ReviewNamTheun2Laos/Thailandpowerprojectcasestudyhandoutforweek2.

Week2:

Class1: ProjectFinanceParticipantsandStructure• Keyprojectcontractparties• Agent/AccountBank• Typicalprojectcontracts• LoanAgreement

o Covenants/RepsandWarrantieso ShareholderAgreementandEquitySubscriptionAgreemento SecurityPackageo EventsofDefault

• FinancialModelClass2: ProjectFinanceSourcesofCapital

• Commercialbanks• ExportCreditAgencies• Multilateral/BilateralDevelopmentBanks• Insurancemarket• Equity–MezzanineandSubDebt• NamTheun2CaseStudydiscussion

Reading:ReadChapter(s)fromtextbook.ReviewandbepreparedtodiscusstheMozalProjectcasestudy

Week3:

Class1: ProjectFinanceRisksandMitigants• Construction/technologyrisk–CompletionandPerformance• Sponsorrisk• Operationalrisk• Revenue/Marketrisk• Financial(FX,currency)risk• Politicalrisk• EnvironmentalandSocialrisk• IndependentConsultants

Class2: MozalProjectcasestudy

• Projectoverview• Keyfinancingissues/challenges• Projectrisksandmitigation• Lessonslearnedandrecommendations

Reading:ReadChapter(s)fromtextbook.ReviewPetrozuatacasestudyandbepreparedtodiscuss.

Assignment#1DueWeek4:ReadCaseStudyhandoutprovidedandanswerthefollowing:

I. UnderstandtheParties:Drawaboxdiagramshowingtherelationshipsoftheparticipants

II. Understandthecontractsandcashflows:Drawaboxdiagramshowingthekeycontractsanddirectionofcashflows

III. IdentifytheStrengthsofProjectIV. IdentifytheWeaknesses/RisksofProjectV. EvaluatetheEnvironmentalconsiderationsandRegulatory/PoliticalEnvironmentVI. StateyourLoanRecommendationVII. MakesuggestedChangesifyourLoanRecommendationisnegative

Week4:

Class1: CaseStudyClassPresentationOverview(tobeconductedWeek6)

CLASSPRESENTATION:

Guidelines:Studentswillbedividedintoteamsandwillberequiredtoanalyzespecificstrategic,commercialandstakeholderissues/questionsrelatedtotheprojectcasestudyinaclasspresentation.Eachteamwillpresenttheircasestudy,theremainderoftheclassisexpectedtocontributetothediscussion,askprobing,thoughtprovokingquestions,andproposealternativesolutionsandstrategies

Situation:Eachteamwillrepresentdifferentkeyprojectstakeholders(sponsor/investor,lenders,NGO,HostGovernment)andwillberequiredtopresenttotheirrespectiveboards,creditcommittees,GovernmentDepartmentstheiranalysisandrecommendationsforinvesting,lendingorsupportingtheproject

Analysis:Analyzethekeyissues,strengths,risksandweaknessesoftheproject.Evaluatethefinancialprojections.Identifythekeyrisks,mitigantsandthepartiestakingthem.Herethestudentshouldapply,whereverappropriate,conceptsfromthecourseanditsreadings.

Recommendation&Conclusion: Make a recommendation on proceeding/not proceeding with the project.Defendyourrecommendation.If“NoGo,”describewhatmustbedone to make the decision a Go. Class2: PetrozuataCaseStudy

• ProjectOverview• Keyfinancingchallenges• Structuralissues• Riskallocationandmitigation• Keylessonslearned

Reading: Chapter(s) from text book. Read handout on “One Belt-One Road” and handoutChinaDailyNewspaperInterview–PaulClifford2014

Assignment#2DueWeek5:Reviewtheprojectcasestudy(provided).Itwillconsistofaprojectoverviewandkeyinformationregardingthecontractstructureandterms.Usingtheinformationprovideddevelopaprojectfinancecashflowmodelandanswerthefollowingquestions:

I. ListthekeyfinancialmodelassumptionsII. CalculatetheminimumandaverageDSCRaswellastheLLCRandmake

recommendationsregardinglenderfinancialcovenantsIII. Listconclusionsonrobustnessoftheprojectcashflowsandkeyvariables/risks

impactingprojectcashflowsustainabilityIV. Propose3sensitivityanalysisscenariosanddetailoutcome

Week5

Class1: ProjectFinanceModel• KeyelementsoftheprojectFinancecashflowmodel• Relationshipbetweenprojectcontracts,financedocumentsandcash

flowmodel• Creatingtheassumptions• Sensitivityanalysis,DSRA• Keyfinancialmodellendermetrics(DSCR,LLCR,PLCR)• Projectsponsorissues

Class2: US-AsiaEnergyMarketDevelopmentsandOutlook

• USShaleOil/NaturalGasMarket• USLNGExportmarket• South-SouthInfrastructureFinancingTrends

Week6

Class1: ClasspresentationClass2: ClassPresentation