Project Finance & Infrastructure: Project Finance Global Rating Methodology

Executive Summary

This report describes the Kroll Bond Rating Agency and its rating affiliates (collectively, “KBRA”) rating methodology used to rate project finance transactions. Project Finance is the long-term financing of infrastructure, energy and other large-scale projects based upon the projected cash flows of the project. Some projects may still be in the planning stages or be under construction, while others are already operational. The project debt is most commonly non-recourse and is often secured by a first priority lien on all of the project’s equity and assets, including rights to revenue under the project’s contracts, so that investors are able to assume control of a project in an event of default.

In most Project Finance transactions, the project is organized as a bankruptcy-remote special purpose entity, such that the investors’ interest in the project is shielded from financial difficulties that may affect the project’s parent or equity holders. Assets that have been…