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10 Documentation of Project Bonds »

Tim Peterson, Shoshanna Harrow
From: International Project Finance: Law and Practice (2nd Edition)
Edited By: John Dewar
Project bonds issued in the international capital markets are used as a source of, or to refinance, project capital. Project bonds are securities and therefore subject to regulations requiring adequate disclosure for investors and restrictions on where and to whom the bonds may be marketed. Advantages of project bonds as compared to loans include improved operational flexibility and the potential for improved price, size, and tenor. Relative disadvantages include regulatory and credit rating requirements, consent and intercreditor issues, and the inability to have multiple drawdowns. The chapter describes the Rule 144A and Regulation S exemptions from US registration, their attendant selling restrictions, the due diligence process, and typical project bond documentation, including the offering circular, underwriting agreement, and indenture.