Financing a project with a bond issue
Financing a project with a bond issue

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Financing a project with a bond issue
  • What is a project bond?
  • Why would a sponsor finance a project with a bond issue?
  • Documentation for a project bond
  • Challenges in using project bonds
  • The 2020 Project Bond Initiative

BREXIT: As of 31 January 2020, the UK is no longer an EU Member State, but has entered an implementation period during which it continues to be treated by the EU as a Member State for many purposes. As a third country, the UK can no longer participate in the EU’s political institutions, agencies, offices, bodies and governance structures (except to the limited extent agreed), but the UK must continue to adhere to its obligations under EU law (including EU treaties, legislation, principles and international agreements) and submit to the continuing jurisdiction of the Court of Justice of the European Union in accordance with the transitional arrangements in Part 4 of the Withdrawal Agreement. For further reading, see: Brexit—introduction to the Withdrawal Agreement. This has an impact on this Practice Note. For guidance on the impact on finance transactions in general, see Practice Note: Brexit—impact on finance transactions.

Commercial loans are the traditional source of financing for most projects in the UK and abroad but when liquidity in the market is squeezed, sponsors are more inclined to look to alternative sources of funding. One alternative source of funding is the bond market.

What is a project bond?

A bond is a form of debt security, and a debt security is a document which evidences a debt or investment (see What