Private, Public and International Joint Lending

Abstract

In previous chapters we have given considerable attention to the analysis and management of country risk. Standards of measuring country risk have been evaluated and cost of funds equated with country-risk differentials. International banks have been viewed in part as investment trusts the purpose of which is to attain efficient portfolio diversification of their international loans. In this chapter we examine project lending and associated risks. As we shall observe, project lending must stand by itself and be evaluated on the basis of direct riskand-return comparisons. Efforts to consider country risks may confuse the issue where project lending is concerned. Finally, there is a brief examination of co-financing and its role in permitting bank lenders to minimise risk.