The Project Finance Handbook: Structuring, Sizing and Underwriting Infrastructure Deals — Two Deals Modeled End to End, With the Models Supplied (The Institutional Finance Handbooks) - Softcover

Sterling, Julian R.

Softcover

ISBN 13: 9798172721380

Publisher: Independently published, 2026

Synopsis

The cover test allowed 538.1 million dollars. The loan was 427.3.

Project finance is the discipline of lending against a cash flow rather than a balance sheet, and almost everything about it follows from one fact: if the asset earns less than expected, the lender takes the loss. This book works through the whole apparatus that exists because of that fact, on two deals modeled end to end.

Northgate is a 96 megawatt data center, built to suit, let for fifteen years on a triple-net lease to an investment-grade tenant. It costs 614.4 million dollars to build and 657.4 to fund. Aurora is a 220 megawatt solar plant with 320 megawatt-hours of storage, contracted for fifteen years and merchant for ten more. One works. The other does not, and the book says so with the arithmetic attached.

Four findings, each computed rather than asserted:

• The loan is the lower of two independent tests. The cover test supports 538.1 million dollars; the 65 per cent loan-to-cost test supports 427.3. The sponsor who negotiated hard on the cover ratio gained nothing, because cover was not the binding constraint — and the deal's real minimum cover is 1.826 times, not the 1.45 anyone agreed. Neither test constrains the 247.2 million dollar balloon at maturity, which is why there is a third one.
• Northgate returns 16.60 per cent to equity, of which only 2.41 points come from exit yield compression — the single variable the sponsor does not control.
• A twenty per cent construction overrun, funded by equity, costs 5.24 points of return. A 375 basis point move in the swap rate costs 3.17. Deal teams spend their anxiety on the wrong one.
• Aurora, unsubsidized, returns 0.13 per cent to equity and needs 105.14 dollars per megawatt-hour to reach ten. With a thirty per cent investment tax credit, 67.31. That credit is thirty-six per cent of the price the plant would otherwise need, which makes the return a political exposure rather than an industrial one.

Sixteen chapters, in the order a practitioner meets the discipline: what non-recourse actually means, the two questions every credit paper answers, the cash flow waterfall, CFADS and who controls its definition, the sizing tests, sculpting and the balloon, sources and uses and the circular reference, covenants converted into dollars of rent, construction risk, availability risk against market risk, the offtaker, rates and policy, building a model that survives review, sensitivities against stress against scenario, and one deal run from first look to exit.

Seven appendices: both models in full, an annotated term sheet, a diligence checklist, a model review checklist, twenty interview questions with answers a practitioner would accept, and a glossary of 121 terms.

Two spreadsheet models come with the book — the files every figure came from. Unlocked, unwatermarked, no sign-up and no email address. Neither contains a circular reference: the funding loop most project finance models bury in iterative calculation is unrolled one pass per column, with a check cell, so both behave identically in every spreadsheet application.

The chapter on model errors names eight the author's own models were caught committing, across three pre-publication reviews, each one priced. That chapter is the reason to trust the other fifteen.

Written for the person who has to produce a number and defend it.

Edition details

• Publisher: Independently published
• Publication date: 2026
• Language: English
• ISBN 13: 9798172721380
• Binding: Paperback
• Number of pages: 288