Credit Enhancement — Collateral Asset Funding

Project owners who are able to purchase a Tier 1 bank instrument (SBLC) for credit enhancement purposes, can raise a credit line against it at their bank. As long as the LTV of the credit facility is higher than the total cost of acquisition, the project owner will create a positive balance that serves as net available, non-repayable project funding in the form of a lump sum. The facility is de facto non-repayable, because the credit facility, interest, and bank charges are (re)paid after 1 year from the SBLC instrument as it is liquidated at maturity after 366 days, not from other sources such as project/business revenues. Subject to monetizer appetite and client capability, this process can be repeated to secure all required project funding.

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