International Project Financing with SBLC

Export-credit agencies, multilateral banks and commercial lenders all lean on additional comfort when funding large-scale infrastructure. A standby letter of credit (SBLC) is one of the fastest ways to provide that comfort. Issued by a bank on behalf of the project company, the SBLC promises payment to the lender if debt service is missed. It is a credit-enhancement tool—nothing more, nothing less.

What an SBLC Actually Does

• Backstops scheduled interest and principal for a defined period (often 6–12 months).
• Mitigates completion risk by covering cost overruns until practical completion is certified.
• Improves the project’s credit profile, lowering the margin on senior debt.
• Can be issued in favour of a trustee or directly to the lenders under a common terms agreement.

What an SBLC Does Not Do

• It does not count as equity. Rating agencies and banks treat it as contingent debt support.
• It does not fix an under-capitalised deal. If the project lacks cash equity, no amount of standby cover will change the leverage limits.
• It does not guarantee 100 % loan-to-value funding. The best projects still raise only 80–90 % debt, even with grants or viability-gap aid.

Raising the Equity Slice

Sponsors typically inject 10–20 % of total project cost. If that is hard to source internally, the gap can be filled by:

• Strategic investors: equipment suppliers, offtakers or contractors taking a minority stake.
• Private-equity funds or infrastructure investors seeking dividend yield and exit value.
• Subordinated debt or mezzanine notes that sit between equity and senior loans, priced accordingly.
• Grants, carbon credits or viability-gap subsidies that act as quasi-equity once fully committed.

Key Parties in a Project Finance Deal

• Sponsors – Developers that form the special-purpose vehicle (SPV) and provide equity.
• Senior Lenders – Commercial banks, DFIs or institutional investors providing long-tenor debt.
• SBLC Issuing Bank – Bank that issues the standby letter in favour of lenders or trustee.
• EPC Contractor – Builds the asset under a fixed-price, date-certain contract.
• Offtaker / Concessionaire – Buys the output (power, toll revenue, product) under a long-term agreement.
• O&M Operator – Runs the asset post-completion.
• Insurance Provider – Covers construction, political and operational risks.
• Advisors – Financial, legal and technical teams that validate models, contracts and risk allocation.
• Security Trustee – Holds collateral and enforces security on behalf of lenders.

Financely’s Role

• Assess project viability and optimal debt-equity mix.
• Source SBLCs through our global bank panel and align wording with lender requirements.
• Arrange senior and mezzanine debt, negotiate term sheets and coordinate due-diligence work streams.
• Support equity syndication to strategic investors or infrastructure funds.

Financely Group is a capital advisory firm and independent placement agent. All services are delivered on a best-efforts basis and subject to KYC, lender approval and a signed mandate. We reserve the right to decline assignments that do not meet professional or regulatory standards.