10 Documentation of Project Bonds

Subject(s):

Guarantees and security — Bonds — Securities lending

Project bonds are bonds issued in the international capital markets to raise financing for projects. Documenting a project bond involves a number of elements not found in more common forms of project finance. This difference is primarily due to the way bonds are marketed and the fact that, unlike loans, bonds are ‘securities’, making them subject to various legal regimes governing the offering and trading of securities, to which traditional loans are not subject. This chapter presents some key considerations for the use of project bonds as a source of financing and summarizes the legal framework for securities offerings, recognizing that various jurisdictions may impose different requirements. After describing the general legal context, the chapter explains the due diligence and underwriting processes for project bonds, followed by a discussion of the various project bond offering documents and how they relate to the legal framework. Finally, there is a brief discussion of bond listings.