Syndicated loan financing is generally the mainstay, certainly traditionally the mainstay of product finance. In most projects, multiple banks will be involved in providing the financing, so you'll have a number of banks that will give a commitment, and this commitment represents a guarantee to provide funds up to an agreed level. You want those first banks to be reputable and secure lenders as that will then draw in further banks. When the loan is sold down to further institutions, the loan wouldn't all be taken up at the very beginning of the project because the cash isn't needed all at the beginning, unlike an acquisition. What will happen is as you spend money on construction, the loan will become more and more drawn down. So during the construction phase, you'll see the syndicated loan be staggered and drawn down through that period. Generally loans in project finance are priced from a bank benchmark rate, and of course, traditionally that's been L-I-B-O-R with the demise of L-I-B-O-R. That will be one of the benchmark rates that will come out of the EU or US and the interest will be paid on a six month or quarterly basis depending on the negotiation. Usually the loans are denominated in US dollars. In other words, the loans are structured in dollars and they'll be syndicated and sold off to other banks in dollars. They can be multicurrency and it really just depends on the structure and the demand for loans. Of course, if you have a dollar loan and you have an asset that's based in a foreign currency, non-dollar, then you may need some kind of hedging and that would be something like a currency swap between the loan that is financing the project. And another currency. There are a lot of fees involved in project financing, but the fees will generally include things like a commitment fee, which gets paid on any undrawn amounts of facilities. A management fee for the first banks who manage the debt. A co-managers fee for the banks who take part in the initial two-part, underwriting syndicate, we'll look at later. A participation fee. This is where the debt is sold down to yet more banks where they generally don't take any underwriting risk and they're at the bottom of the tree. And so the participation fee will tend to be the smallest of the fees. Project finance will need an agent bank and the agent bank will effectively do the admin and they'll do things like managing payments coming from the special purpose vehicle to the banks, and also monitoring things like covenant suites, so they represent the admin behind the loan. Increasingly, in recent times, especially because of the financial crisis, a more common method of financing is a club deal. Rather than go through a whole large syndication process and then selling down the loan afterwards. What would happen in a club deal is that a group of banks come together And pitch for the transaction. This means it's easier to renegotiate because you are dealing with a fixed number of banks and the debt doesn't need to be sold down. It also means that the lead bank will generally get less fees and those fees will be spread amongst the initial group of lenders on a more equal basis.

Also becoming more common is that once the loans have been negotiated, they may be sold down to other investors, and these don't necessarily need to be banks. They could be insurance companies, pension funds, or other non-bank players. And non-bank players are becoming increasingly common because of the higher regulatory requirements that banks are facing.