Structured Project Finance

MACH GLOBAL POWER  is a Financial Consultancy and Financial Service Company and their proficiency is commendable in this business. Mach Global Power transcendence is due to its global friends and influence, experience and professionalism, and, knowledge and resourcefulness to create the proper platform to satisfy the requirements of the client’s endeavor, tasks, and interest.

Mach Global Power offers solutions to Funding Services, Project Structured Finance, and Sovereign Guarantees given by friendly countries and funding institutions and organizations to clients worldwide such as:

  • Private and Public Organizations
  • Corporations
  • Governments
  • Institutions

Mach Global Power Financial Services as acquired from friendly countries and institutions are only given if and only if recipients have a reputable status.

Noel Banawa
CEO Noel Banawa with US President Ronald Reagan, California Governor Pete Wilson, Los Angeles Mayor Tom Bradley, and, Sacramento Mayor Ann Rudin.
Bankers Meeting Around The Globe

Mach Global Power

Mach Global Power’s offers the latest financial services:

  • Trade Finance
  • Syndicated Loans
  • Project Finance
  • Structured Finance
  • Financial Consultancy and Management
Signing Ceremony for a Structured Project Finance, as well as Project Development. Construction, and Managment, for a University Hospital with a Research and New Technology Facility. Project will be built in Cambodia.

Structured Project Finance
and Sovereign Guarantee

WHAT IS A SOVEREIGN GUARANTEE?

A guarantee by the government that all obligations will be satisfied when and if the primary obligor goes into default. It is the risk that a foreign central bank will alter its foreign-exchange regulations thereby significantly reducing or completely nulling the value of foreign-exchange contracts. The Sovereign Guarantee is just a “standard” financial guarantee but it is issued by a Government body not a private institution like banks or corporations.

WHY DO GOVERNMENTS USE SOVEREIGN GUARANTEES?

One of the most attractive features for project financing is that it allows the sponsors of a project to guarantee the obligations of a special purpose project company in lieu of incurring direct obligations. Being contingent obligations, guarantees need not be reflected on the guarantor’s balance sheet. However, guarantees are required to be disclosed in footnotes to financial statements in accordance with the prescriptions of the United States Financial Accounting Standards Board.

Indeed, rating agencies often take note of a sponsor’s contingent liabilities, particularly when such liabilities are substantial. Nonetheless, the impact of such guarantees on a sponsor’s credit profile is, by far, much less severe than an equivalent direct liability on its balance sheet. Sovereign Guarantees have therefore become one of the keystones of project finance. Countries that wish to issue such instruments need to be aware of the need to have the liability noted in their financial statements as a contingent liability.

WHAT IS THE PURPOSE OF SOVEREIGN GUARANTEES?

Governments at all levels can issue “financial guarantees” in order to financially promote projects that are deemed to be in the public interest. The guarantees are used as economic incentives for the capital market to finance the projects. In Sweden, for example, financial guarantees have in the past been used to promote agriculture, fishing, housing construction, shipbuilding and energy supply. From the beginning of the 90’s, they have primarily been used to alleviate the Swedish bank crisis and for promoting investment in the infrastructure. The Sovereign Guarantee is only as good as the Government issuing it.

WHO CAN ISSUE SOVEREIGN GUARANTEES?

Generally speaking a Sovereign Guarantee is issued for project financing and loans for government projects such as: Power Projects, Roads, Railways, Ports and Shipping Infrastructure, Telecommunication and other necessary large State Infrastructure projects. In the case of private projects, the Sovereign Guarantee poses a totally different set of problems. Depending on the Constitution (or Ruler) of a particular country the Civil Government Administration will evaluate projects looking to be underwritten by a Sovereign Guarantee and make a recommendation to the Parliament (or the Ruler of the Country) as to whether issuing a Sovereign Guarantee is prudent or allowable.

Usually if a Parliament term in office is approaching its end, “no sovereign guarantee were issued to the private sector, but they will to the government sector. In all cases based on the Constitution of a particular country it comes down to the judgement of the President, Prime Minister or Ruler to issue or not issue sovereign guarantee on the private sector.

He/she can do it (issue) provided that the project is classified as sort of to solve an impending crisis, for example power crisis, water supply crisis, etc. Now, in the world many newly elected government may issue Sovereign Guarantees to power projects which need utmost attention to solve power crisis that is foreseen to happen in the immediate future. In general Sovereign Guarantees will be issued by the Ministry of Finance and ratified by Parliament.

Information Credit

Power Generation Contract Signing by Electric Resource Group, Inc., USA Messrs D. Sam Scheele, chairman, and Manoel B. Banawa, CEO and the Chinese Government Electric Company
Bus Export Contract Signing by Fortune Motors USA, Mr. Manoel B. Banawa, CEO and GACBUS, Chinese Government State-Owned Enterprises.

Created by CEO Noel Banawa

It is instructive to note that although many emerging market infrastructure projects utilizing project financing have been conceived, most have been stillborn mainly because Sovereign Guarantees have been impossible to obtain. Mach Global Power as an ally and affiliate will lend you a hand through its global influence and associations. Your dominance in your industry can be achieve.