General Studies · Limited Recourse Financing
In the context of infrastructure project finance, a Special Purpose Vehicle (SPV) is usually structured to ensure 'non-recourse' or 'limited-recourse' financing. What is the fundamental implication of this structure for the lenders?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The lenders have a legal right to recover the debt from the general assets of the project's parent sponsors if the project fails.
- 2The lenders' claim is primarily restricted to the cash flows and assets of the specific project, rather than the sponsors' balance sheet.✓
- 3The project is funded entirely through government grants without any obligation for repayment.
- 4The lenders are entitled to a fixed percentage of the parent company's global profits until the debt is cleared.
Correct answer
The lenders' claim is primarily restricted to the cash flows and assets of the specific project, rather than the sponsors' balance sheet.
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