Code Course Type Regular Semester Theory Practice Lab Credits ECTS
BAF 404 B 2 3 0 0 3 7.5
Lecturer and Office Hours: Uğur Ergün
Second Lecturer(s): NA
Teaching Assistant(s) and Office Hours: NA
Language: English
Compulsory/Elective: Elective
Classroom and Meeting Time:
Course Description: This course considers financial and economic analysis of private and public projects associated with the operations in domestic and international environment. Due to the globalization and emergence of opportunities for private and public organizations became necessary to expand market shares, production and servicing capabilities, which are held by use of various project concepts. However, some projects implemented have not always fulfilled expectations as a result of inefficient planning, selection and evaluations. Learning Objectives: 1. Develop teamwork and project management skills. 2. Integrate and synthesize students knowledge. 3. Practice applying research methods and tools. 4. Refine projects.
Course Objectives: The purpose of the course is to understand what project finance is, why it is used, and how it is used. Students will learn what the necessary elements are that support the use of project finance to include contractual agreements, technology, sponsors, risk identification and mitigation, sources of capital, financial structuring, the use of financial modeling, accounting practices and considerations, and tax considerations.
Week Topics
1 Review of Syllabus: An overview of project finance.
2 Input and Output Contracts Modeling Project Finance Transactions. Case: Cogenergy (US) (a conceptual exercise, without quantitative data) Reading: Yescombe, Principles of Project Finance, Chapters 2, 3, 6, 7, 8, and 13.
3 Review of Cogenergy calculations, Modeling Project Finance Transactions, Risk Allocation, Political Risk, Risk Mitigation Case: Cogenergy case (with quantitative information) Reading: Yescombe, Principles of Project Finance, Chapters 4, 9, 11, and 12 Assignment: Prepare Cogenergy construction loan calculation and a model for first 10 years using lease financing
4 Foreign exchange risk, Bank market syndications. Reading: (1)Yescombe, Principles of Project Finance, Chapter 5, 14 and 16. (2) Sheppard, “The Role of Multilateral Banks and ECAs” originally published in The Principles of Project Finance, 2012) (3) Sheppard, “Capital Markets Financing for Developing-Country Infrastructure Projects” (UN Paper)
5 Discussion of the MegaPower case Application of the Contractual Model to International Projects Case: Reading: (1) Erik Woodhouse, “The Experience with Independent Power Projects (IPPs) in Developing Countries: Interim Report”, PESD Working Paper #39, 2005 Sheppard, “Theoretical Considerations Concerning Approaches to Mitigate Foreign Exchange Risk for Developing-Country Infrastructure Projects”.
6 AES Tietê Bond Issue, Dominican Republic Toll Road Bond Issue Reading: (1) Moody’s Pre-sale Report for Tietê (2) Fitch’s Pre-sale Report for Tietê (3) Sheppard, “AES Tietê: Protecting International Infrastructure Transactions from the Risk of Devaluation” (4) Tiete transaction diagram (PowerPoint) (5) Tiete Comparable Memo
7 Comparison of Regulatory Regimes, Other Latin American Transactions, Case of ElectroPublic. Reading: Argentine Gas Trust Analysis (Moody’s), Talca-Chillan Toll Road Case Note (Chile)
8 Mid Term Exam
9 Discussion of Petrozuata case, Follow-up information on subsequent Petrozuata developments. Readings: (1) Yescombe, Principles of Project Finance, Chapter 17 (2) Sheppard, “Carbon Credits: An External Financing Source for Latin American Project Financing” (3) Sheppard, “Transport Projects”
10 Risk analysis of Lake Kivu (Rwanda) project Project Finance in Africa Infrastructure Funds Whole Business securitization.
11 Quezon case analysis,Quezon (Philippines) (a case dealing with equity valuation issues in relation to country risk), Course review.
12 Project Presentation
13 Project Presentation
14 Review
Textbook: Yescombe, E. R., Principles of Project Finance,2nd Edition, Academic Press, (2014) Stefano, Gatti., (2013),Project Finance in Theory and Practice, Designing, Structuring, and Financing Private and Public Projects (2nd Edition).
Other References: Depending on topic extra materials will be provided. Other References defined in Course Content
Laboratory Work:
Computer Usage:
Others: No
1 To understand the fundamental principles of project evaluation and financing
2 To learn and evaluate the implications, in terms of value creation
3 To analyze complex, unstructured qualitative and quantitative problems, using appropriate tools.
4 To comprehend and critically evaluate information presented in written and numeric form.
5 To express ideas clearly, logically and persuasively in oral and written communication.
(Blank : no contribution, 1: least contribution ... 5: highest contribution)
No Program Competencies Cont.
MSc BAF Program
1 The students are gained the ability to look at the problems of daily life from a broader perspective. They gain the needed skills not only to understand economic problems in banking and finance but also to construct a model and defend in meaningful way. 5
2 They have knowledge about the finance and banking. 5
3 They have knowledge about the money and banking. 5
4 They have knowledge about the international finance and banking. 5
5 They have ability to use mathematical and statistical methods in banking and finance. 5
6 They know how to use computer programs in both daily office usage and statistical data evaluations in banking and finance department. 4
7 They have necessary banking and finance skills that needed in private and public sector. 5
8 They are intended to be specialist in one of departmental fields that they choose from the list of general economics, finance economics, public finance, corporate finance, finance management, international finance markets and institutions, banking and central banking, international finance and banking, money and banking, international trade and banking. 4
9 They have ability to utilize fundamental economic theories and tools to solve economic problems in banking and finance. 5
10 They are aware of the fact that banking and finance is a social science and they respect the social perspectives and social values of the society’s ethics. 5
Method Quantity Percentage
Midterm Exam(s)
Final Exam
Total Percent: 100%
Activities Quantity Duration(Hours) Total Workload(Hours)
Course Duration (Including the exam week: 16x Total course hours) 16 4 64
Hours for off-the-classroom study (Pre-study, practice) 16 2 32
Mid-terms 1 8 8
Assignments 1 30 30
Final examination 1 9 9
Other 1 7 7
Total Work Load:
Total Work Load/25(h):
ECTS Credit of the Course: