Project finance—Export Credit Agencies, multilateral lenders and development finance institutions
Produced in partnership with Dimitri Papaefstratiou, Joseph Lam and Wen Liu of DLA Piper (UK) LLP
Project finance—Export Credit Agencies, multilateral lenders and development finance institutions

The following Banking & Finance guidance note Produced in partnership with Dimitri Papaefstratiou, Joseph Lam and Wen Liu of DLA Piper (UK) LLP provides comprehensive and up to date legal information covering:

  • Project finance—Export Credit Agencies, multilateral lenders and development finance institutions
  • What are ECAs and DFIs?
  • Eligibility for ECA or DFI support
  • Types of support
  • Typical structure for a project finance involving ECA or DFI lenders
  • Typical documentation for a project finance involving ECA or DFI lenders
  • Advantages and disadvantages of ECA or DFI lender involvement

Projects are typically financed on a limited recourse basis through one or more sources, including:

  1. government contributions

  2. senior debt provided by commercial lenders and/or funds, and

  3. equity provided by project sponsors

However, in certain jurisdictions, senior debt provided by commercial lenders and/or funds may be difficult to obtain due to the limitations on local liquidity and/or actual or perceived local political risks (see Practice Note: Project risks and risk allocation—Legal and political risk in a project finance transaction).

This funding gap in developing markets may be bridged by funding provided by institutional lenders, such as Export Credit Agencies (ECAs) and multilateral or bilateral (national) Development Finance Institutions (DFIs). Alternatively, lenders providing senior debt may be supported by an ECA or DFI by means of a guarantee or other form of insurance cover.

Typically, ECAs are involved in projects abroad to promote their national industries in the context of international trade, for example, where a national industry owns equity in a foreign project or is a key project contractor or when it supplies project equipment to such a project (see Practice Note: Project finance—key project parties). DFIs are mandated to support the private sector in developing or emerging markets for the purpose of fostering sustainable economic development in those markets. Although ECAs and DFIs have different goals and missions, there are overlaps in their scope