Project finance is the long term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of the project investors. Usually, a project financing structure involves a number of equity investors, as well as a syndicate of banks that provide loans to the project. The loans are most commonly non-recourse loans or limited-recourse loans, which are paid entirely from project cash flow, rather than from the general assets or creditworthiness of the project investors. To avoiding the credit risk, securing all of the project assets is basic requirement, including the revenue-producing contracts. Project lenders are given a lien on all of these assets, and are able to assume control of a project if the project company has difficulties complying with the loan terms.

项目贷款是指基于项目现金流为还款来源而不是投资者资产的固定资产或工业项目长期贷款。一般而言，项目贷款包含股权投资者和提供贷款的银团共同组成。通常项目贷款是无追索权或有限追索权的贷款，依靠项目的现金流而不是股东的资产或信用来偿还。为避免信用风险，包换产销合同在内的所有资产抵押是个基本的要求。贷款者需要抵押所有资产，并能在项目陷入困局时获得对项目的绝对控制权。

Project financing is the common way to get fund from the internatioanal captial market,especially for “green land project”. At the same time, it is also the most complex and difficult financing method with the long process and terrible law files. Traditionally, project financing has been most commonly used in the mining, transportation, telecommunication and public utility industries. Now, we can share the comprehensive understanding of internatioanal project financing based on a real case as the following:

在国际资本市场上，项目融资是获得资金的惯用方式，尤其对于绿地项目而言。同时，考虑到其冗长的程序和令人恐惧的法律文书，项目融资也是最复杂最困难的的融资方式。一般来说，项目融资往往运用在采矿、交通、电信和公共设施领域。现在，我们就基于一个真实的例子来分享对国际项目融资的理解。

1. the real case

Xinxing pipe group, the largest DI pipe company in the world, set up a joint venture called Xindia, with Minmetal and several indian investors in Indian,which will grow up to the most powerful steel plant in Indian. At the first phrase in 2008, Xindi planed to set up a 2 million tons pellets plant. Unfortunately, that plan was made up in September 2008, just several days before the bankrupt of RBS. It is hard to get any fund by project financing without credible guarantee during the horrible financial crisis, no matter in china or from the international marker. Xindia change it plan from 2 million tons to 0.8 million tons, cut down the investment plan, sign exclusive sales contract with Minmetal, mortgage all asset and 50% equities to the banks. At the end, Xindia got the project loan from the Inidan local syndicate banks leading by SBI, the largest Indian bank. That was the first time which Indian banks lend to a project controlled by china state-owned company. Now, the pellet plant are bring into use, and the second phrase of DI pipe plant are ready. CDB have made the commitment as the leading bank of project financing with the commercial guarantee of Sinosure.

1、一个真实的案例

新兴铸管集团，国际上最大的球墨铸管生产企业，与五矿集团和一些印度投资者在印度设立一家合资企业Xindia，希望成长为印度最具影响力的钢铁厂。在2008年的一期规划中，Xindia计划设立一家200万吨的球团厂。很遗憾， 这个决定制定于2008年的九月，就在苏格兰皇家银行破产前几天。在金融危机中，无论在国内还是在国际上，没有足值担保的项目贷款是很难融到钱的。Xindia把生产规模降低到80万吨，减少了投资总额，与五矿集团签订了包销协议，将全部资产和50%的股权抵押给银行，最终获得了以印度最大的银行——印度国家银行为牵头行的印度本土银团的项目贷款。这也是印度银行首次贷款给中国国有企业控股的项目。现在，球团厂已经投入运营，二期铸管厂也开始准备。国家开发银行已经承诺作为项目贷款的牵头行，中国出口信用保险公司也将提供商业保险。

2. the key points of project financing

According to the unforeseeable risk and limited-recourse, the most important point of project financing is the credit construction, which make the banks sure that the cash flow will reach the expected level. The key elements which can infulece the banks judgement as the following:

2、项目融资的关键点

考虑到不可预知的风险和有限追索权，项目融资的最关键点就是信用结构，它必须能让银行相信项目的现金流能达到预期水平。能影响银行判断的关键要素如下：

（1）the successful history:

Nothing is more poweful to make sure the end of project except the successful history. The No 1 rank of DI pipe market is the most useful evidence than all words, and is the base of the project loan.

（1）成功的历史：

没有什么比成功的历史更能证明项目的结果，世界第一的铸管行业地位比任何语言都有说服力，也是项目融资的基础。

（2）prefect business logic:

The history is history, it can prove you have the ability to be winner, but it can not make the future sure. So you have make the prefect business logic to prove that you can do better than before, because you have the better resources. Advanced Xinxing technology in Di pipes, the huge iron market in china and the vast potential pipe market in Indian, the international trading channels from Minmetal, the cheaper and rich iron resouce from Indian, the powerful infulence from local investors, and the new partner from US, all those make a prefect logic and plan to success.

（2）完美的商业逻辑

历史只是历史，它只能证明你有能力成为获胜者，但并不能保证未来成真。所以你必须有完美的商业逻辑证明你能比历史做的更好，因为你有更好的资源。先进的新兴铸管技术，巨大的中国铁矿市场和潜在的印度铸管市场，廉价丰富的印度资源，五矿的国际贸易渠道，本土投资者的强大影响，再加上新进的美国合作伙伴，所有这些就构成了通往成功的完美逻辑和计划。

（3）necessary credit assurance

To the bankers, the successful history and prefect logic are castles in the air, they can understand, they can agree what you have said. At the end, you should show hands to help them chear the doubts. First of all, 30% of total investment is common requirement as the equity; Second, a SPE (special purpose entity) which has no assets other than the project is required; Third, any way can locate risk amont the participators are encouraged, just like long-term contracts of construction, supply, off-take and concession agreements; Finally, A complex project finance structure may incorporate corporate finance, securitization, options, insurance provisions or other types of collateral enhancement to mitigate unallocated risk.

（3）必要的信用保证

对于银行家们而言，成功的经验和完美的商业逻辑是空中楼阁。他们能理解，也同意你所说的一切。到最后，你还是得摊牌以帮助他们消除疑虑。首先，总投资30%的自有资金做股本是通常的要求；其次，一个拥有项目所有资产和权益的特殊目的公司（项目公司）是必须的；再者，任何可以在参与者之间分担风险的方式都值得鼓励的，比如长期的建设、供应、报销、特许协议；最后，复杂项目融资结构还包含公司融资、资产证券化、担保条款和其他降低未分担风险的措施。

3. Conclusions

3、结论

(1) According to the investors, the most valuable points of project financing are long-term period and limited-recourse. The 7-10 years long-term loan and interest-free during constructing period can lower down the risk and pressure of investors. Limited-recourse can protect the maximum right of investors especiall in developing market.

（1）对投资者而言，项目融资的两个最有价值的地方在于长期性和有限追索权。7-10年的长期贷款和建设期免息的条件将降低投资者的风险和压力，有限追索权将最大限度保护投资者的权益，尤其是在新兴市场上。

(2) At the banks’ side, the core business of project financing is stable cash flow. That is why the transportation, telecommunication and public utility industries use that method frequently, but other industries not.

（2）对于银行而言，项目融资的核心业务是稳定的现金流。这也是为什么交通、电信和公共事业经常采用项目融资，而其他行业不采用的原因。